Indera garments Pvt. Ltd, Rourkela V. ADIT, CPC, Bangalure

ITA 171/CTK/2022

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Indera Garments Pvt Ltd. appealed against the orders of the CIT(A), NFAC, Delhi, concerning the disallowance of employees' contributions to PF and ESI for the assessment years 2018-2019 and 2019-2020. The primary legal issue was whether the delayed payment of these contributions, made before the due date of filing the income tax return under section 139(1) of the Income Tax Act, should be allowed as a deduction. The Tribunal noted the Supreme Court's decision in Checkmate Services Pvt Ltd, which held that such contributions, if not paid within the prescribed due dates under the relevant PF Act, are not allowable under section 43B of the Act, even if paid before the due date of filing the return. The Tribunal, however, restored the matter to the Assessing Officer to consider other possible allowances under different sections of the Income Tax Act, as suggested by the assessee's representative.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 300242 (ITAT-CUTTACK)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 22-01-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 20-11-2022
• Other Referred Cases: Checkmate Services Pvt Ltd vs CIT, Nirakar Security & Consultancy Services Pvt Ltd vs ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BEFORE AND ARUN KHODPIA, ACCOUNTANT MEMBER Assessment Year Indera Garments Pvt Ltd., Main Road, Rourkela, Sundargarh PAN/GIR No. (Appellant Per Bench Both the orders of the ld CIT(A), NFAC, Delhi, No.ITBA/NFAC/S/2022 and dated 30.8.2022 in Appeal No. No.ITBA/NFAC/S/2022 23/1045039673(1) for the assessment year 2019 2. Shri Pawan Kumar Agarwal, ld AR appeared for the assessee S.C.Mohanty, ld Sr DR appeared for the revenue. IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI GEORGE MATHAN, JUDICIAL AND ARUN KHODPIA, ACCOUNTANT MEMBER ITA Nos.171 & 172/CTK/20 Assessment Years : 2018-2019 & 2019 Indera Garments Pvt Ltd., Main Road, Rourkela, Vs. DCIT, CPC, Income Tax Department, Bangalore PAN/GIR No.AAACI 9173 R (Appellant) .. ( Respondent Assessee by : Shri Pawan Kumar Agarwal,AR Revenue by : Shri S.C.Mohanty, Sr Date of Hearing : 23/01 Date of Pronouncement : 23/01 O R D E R Both the appeals filed by the assessee are s of the ld CIT(A), NFAC, Delhi, dated ITBA/NFAC/S/2022-23/1045261984(1) for the assessment year and dated 30.8.2022 in Appeal No. No.ITBA/NFAC/S/2022 23/1045039673(1) for the assessment year 2019-2020. Shri Pawan Kumar Agarwal, ld AR appeared for the assessee S.C.Mohanty, ld Sr DR appeared for the revenue. Page1 | 5 IN THE INCOME TAX APPELLATE TRIBUNAL, JUDICIAL MEMBER AND ARUN KHODPIA, ACCOUNTANT MEMBER /CTK/2022 2019 & 2019-2020 DCIT, CPC, Income Tax Department, Bangalore Respondent) Pawan Kumar Agarwal,AR S.C.Mohanty, Sr DR 01/2023 /01/2023 against the separate dated 7.9.2022 in Appeal for the assessment year 2018-19 and dated 30.8.2022 in Appeal No. No.ITBA/NFAC/S/2022- 2020. Shri Pawan Kumar Agarwal, ld AR appeared for the assessee and Shri ITA Nos.171 & 172/CTK/2022 Assessment Years : 2018-2019 & 2019-2020 Page2 | 5 3. The appeal for the assessment year 2018-19 is barred by limitation by 15 days. The assessee has filed condonation petition dated 28.11.2022 stating that as the wife of the Director of the assessee company was sick and under treatment during the relevant time, the Director could not come to the office and consequently, there was delay of 15 days in filing the appeal. It is prayed that the delay in filing the appeal may kindly be condoned. Ld Sr DR did not have any objection to the request of ld AR of the assessee. Consequently, the delay of 15 days in filing the appeal for the assessment year 2018-19 is condoned and the appeal is admitted for adjudication,. 4. It was submitted by ld AR that the issue involved in the appeals is delayed payment of PF and ESI of Rs.1,55,516/- for the assessment year 2018-19 and Rs.1,74,155/- for the assessment year 2019-20 in respect of employees contribution. Ld A.R. submitted that the payment was remitted well before the due date of filing of return of income u/s.139(1) of the Act. 5. Ld Sr DR submitted that the issue is now squarely covered by the decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt Ltd vs CIT in Civil Appeal No.2833 of 2016 dated 12.10.2022, wherein, the Hon’ble Supreme Court has categorically held that if the employees contribution to PF and ESI has been paid beyond the time prescribed under the relevant PF Act, then same is not allowable under section 43B even after the payment has been made before the due date of filing of return ITA Nos.171 & 172/CTK/2022 Assessment Years : 2018-2019 & 2019-2020 Page3 | 5 under the Income tax Act. It was the submission that the amount of employees contribution to PF and ESI, which has not been paid within the due date as prescribed under the relevant Act, has been held by Hon’ble Supreme Court to be not allowable u/s.36(1)(va) of the Act. It was the submission that the Hon’ble Supreme Court in paras 52 & 53 has also categorically held that the provisions of section 43B would not apply to the employees’ contribution to PF and ESI. 6. We have considered the rival submissions. Admittedly, the Hon’ble Supreme Court in the case of Checkmate Services Pvt Ltd(supra) has categorically held that the employees contribution to PF and ESI to the extent it is not paid within due date prescribed under the PF Act, is not allowable u/s.36(1)(va) of the Act. The Hon’ble Supreme Court has also admittedly held that the provisions of section 43B would not apply to the provisions of section 36(1)(va) of the Act in respect of employees contribution. Respectfully following the decision of Hon’ble Supreme Court in the case of Checkmate Services Pvt Ltd(supra), we are of the view that the delayed payment in respect of employees contribution to PF and ESI is not allowable. 7. In the case of Nirakar Security & Consultancy Services Pvt Ltd vs ITO in ITA No.98/CTK/2022 for Assessment Year 2016-17, order dated 17.10.2022, the Co-ordinate Bench of this Tribunal ITA Nos.171 & 172/CTK/2022 Assessment Years : 2018-2019 & 2019-2020 Page4 | 5 after considering the arguments of ld AR, has restored the issue to the file of the Assessing officer with the following directions: “6. Liberty is granted to the ld AR to make all submissions in respect of allowability of disallowed contribution of the employees to PF and ESI under other relevant provisions in the interest of justice. This direction is being given because ld AR has submitted that as the amount is not allowable under section 36(1)(va) of the Act and same is also not covered under section 43B of the Act, the amount of delayed contribution to PF and ESI in respect of employees contribution would be treated as income in the hands of the assessee u/.s.2(24)(x) and on subsequent payment of the same, it would be a business expenditure, which can be claimed u/s.37(1) of the Act. We are not expressing any opinion in regard to his arguments as it has not been examined by the lower authorities. Liberty is also granted to the assessee to raise all arguments as are found necessary by him before the lower authorities.” 8. As the issue in the present appeals is also identical to the issue in the case of Nirakar Security & Consultancy Services Pvt Ltd.,(supra), on identical findings the issue in these appeals is restored to the file of the AO for re-adjudication after granting the assessee adequate opportunity of being heard. 9. In the result, appeals of the assessee stand partly allowed for statistical purposes. Order dictated and pronounced in the open court on 23/01/2023. Sd/- sd/- (Arun Khodpia) (George Mathan) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 23/01/2023 B.K.Parida, SPS (OS) ITA Nos.171 & 172/CTK/2022 Assessment Years : 2018-2019 & 2019-2020 Page5 | 5 Copy of the Order forwarded to : By order Sr.Pvt.secretary ITAT, Cuttack 1. The Appellant : Indera Garments Pvt Ltd., Main Road, Rourkela, Sundargarh 2. The Respondent: DCIT, CPC, Income Tax Department, Bangalore 3. The CIT(A)-, NFAC, Delhi 4. Pr.CIT-, Sambalpur 5. DR, ITAT, Cuttack 6. Guard file. //True Copy//