SHRI MAHABIR DYEING AND PRINTING MILLS PVT. LTD, MUMBAI V. DCIT 4(3) (1) , MUMBAI

ITA 1829/MUM/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 3404 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2018-2019
• Appeal Filed On: 07-10-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHARTI SINGH
• Keywords: Set aside
• Section: 2; 43B; 143(1); 192; 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “H” BENCH, MUMBAI BEFORE SHRI AMARJIT SINGH, JM AND SHRI S. RIFAUR RAHMAN, AM आयकर अपील सं/ I.T.A. No. 1829/Mum/2021 (निर्धारण वर्ा / Assessment Year: 2018-19) Mahabir Dyeing and Printing Mills Pvt. Ltd. 510/511 Kakad Market, 306 Kalbadevi Road, Mumbai- 400002. बिधम/ Vs. DCIT-4(3)(1) Room No.649, 6 th Floor, Aayakr Bhavan, M. K. Road, Mumbai-400020. स्थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAACM5098H (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) सुनवाई की तारीख / Date of Hearing: 06/04/2022 घोषणा की तारीख /Date of Pronouncement: 28/04/2022 आदेश / O R D E R PER AMARJIT SINGH, JM: The assessee has filed the present appeal against the order dated 08.09.2021 passed by the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the “NFAC”] relevant to the A.Y.2018-19. 2. The assessee has raised the following grounds: - “1. The ld. CIT(A) erred in not appreciating the fact that the intimation issued by the Ld. AO CPC Bangalore u/s 143(1) of the Act is erroneous / without jurisdiction since additions on issues where two views are possible cannot be made. 2. The ld. CIT(A) erred in confirming addition of Rs.4,37,188/- u/s 36(1)(va) of the Ac4t without appreciating the Assessee by: Shri Ryan Saldanha Revenue by: Ms. Bharti Singh (Sr. AR) ITA No. 1829/Mum/2021 A.Y. 2018-19 2 fact that the employees contribution to PF and ESIC was deposited before the due date of filing of return. 3. The appellant prays that the adjustment made in the intimation order u/s 143(1) of the Act may be deleted. 4. The appellant craves your honour’s leave to add, alter or amend any ground of appeal at the time of hearing or before.” 3. The brief facts of the case are that the assessee filed its return of income for A.Y.2018-19 on 27.10.2018. The return was processed u/s 143(1) of the Act vide order dated 13.11.2019. The appellant has made payment towards contribution to employees provident fund and ESI of Rs.11,18,653/- u/s 36(1) (va) of the Act. Out of the above, the assessee submits that it has paid the employees contribution of Rs.4,37,188/- beyond the due date. The return was processed u/s 143(1) of the Act. In the intimation u/s 143(1) of the Act, the CPC Bangalore have disallowed the contribution to employees provident fund and ESI of Rs.4,37,188/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who dismissed the appeal of the assessee but the assessee was not satisfied, therefore, the assessee has filed the present appeal before us. ISSUE NOs.1 to 3 4. Issue nos. 1 to 3 are inter-connected, therefore, are being taken up together for adjudication. However, all the issues are in connection with the confirmation of the disallowance of Rs.4,37,188/- u/s 36(1)(va) of the Act. The contention of the assessee is that the Employee’s Contribution of Rs.4,37,188/- was deposited before the due date of filing the return, therefore, the same amount is liable to be allowable u/s 36(1)(va) of the Act. It is also argued that the issue has duly been covered by the decision in ITA No. 1829/Mum/2021 A.Y. 2018-19 3 the case of Duratex Apparels Vs. ITO-24(1)(1) bearing ITA. No.1378/Mum/2021 for the A.Y.2018-19 & 15016/Mum/2021 for the A.Y.2019-20 dated 28.02.2022, therefore, the claim of the assessee is allowable in the interest of justice. However, on the other hand, the Ld. Representative of the Department has strongly relied upon the order passed by CIT(A) in question. The factual situation is not in dispute that the assessee has deposited the Employee’s Contribution to PF and ESIC before the due date of filing the return. This issue has duly been adjudicated by Hon’ble ITAT in the case of Duratex Apparels Vs. ITO-24(1)(1) bearing ITA. No.1378/Mum/2021 for the A.Y.2018-19 & 15016/Mum/2021 for the A.Y.2019-20 dated 28.02.2022. The relevant finding is hereby reproduced as under: - “6. Heard both sides and perused the material on record. Without rendering the facts as elaborated above, the assessee has deposited employee’s contribution to PF/ESIC after due date specified in PF/ESIC Acts but before the due date of filing the return of income as prescribed in section 139(1) of the act. With the assistance of Ld. Representative, we have perused the decision of Hon’ble Jurisdiction Bombay High Court in the case of CIT v. Hind Filter (supra) and Ghatge Patil Transports Ltd. (supra). In the case of Ghatge Patil Transports Ltd. (supra), the Hon’ble jurisdictional High Court held that both employers and employee’s contributions are covered under the amendment to section 43B and judgment of the Hon’ble Supreme Court in CIT v. Alom Extrusions Ltd. [2009] 319 ITR 306/185 Taxman 416 and payment made was subject to benefit of section 43B. We have also gone through the decision of ITAT Mavinahalli Shivanajappa Vijay Kumar (supra) and Adhyar Anand Bhavan Sweets India P. Ltd. (supra) on the issue of applicability of the amended ITA No. 1829/Mum/2021 A.Y. 2018-19 4 provisions of Explanation 2 to section 36(1)(va). The ITAT Bangalore vide ITA No. 596/Bang/2021 in the case of Shivanajappa Vijay Kumar (supra) after following the decision of Hon’ble High Court of Karnataka held that the amendment made to section 36(1)(va) of the Act will have prospective application. We have also perused the decision of ITAT Chennai in the case of Adhyar Anand Bhavan Sweets India P. Ltd. (supra), wherein after following the decision of Hon’ble High Court of Madras in the case of M/s Industrial Security and Intelligence India P. Ltd. in TCA No. 585/2015 held that the amendment brought in the statute by Finance Act, 2021, the provisions of section 36(1)(va) r.w.s. 43B of the Act amended by inserting Explanation 2 is prospective and not retrospective. 6.1 In the case of the assessee, it had remitted the employee’s contribution towards PF/ESIC beyond the due date for payment as specified in PF/ESIC Act, but within the due date for filing the return of income, therefore, following the aforesaid decisions, we considered that Ld. CIT(A) is not justified in disallowing the claim of deduction of the assessee. Accordingly, we decide this issue in favour of the assessee and disallowance made by the Assessing Officer is deleted. Since we have decided the issue in favour of the assessee, therefore, ground No. 1 of the assessee is not required adjudication.” 5. Further, we find that the issue has also been covered by the decision of Hon’ble ITAT in the case DCIT Vs. M/s. Maharashtra Tourism Development Corporation Ltd. in ITA. Nos. 6425/M/2017 decided on 27.07.2021. The relevant finding is reproduced below: “13. The next issue in this appeal of Revenue is as regards to the order of CIT(A) deleting the disallowance made by Assessing Officer of employees contribution to provident fund beyond due date of ITA No. 1829/Mum/2021 A.Y. 2018-19 5 respective statute amounting to ₹11,03,233/-. For this, Revenue has raised the following ground No.4: - “4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of additions made by the Assessing Officer of ₹11,03,233/- without taking into consideration and the fact that in identical circumstances decided the issue in favour of Revenue.” 14. Brief facts are that the Assessing Officer noticed from Annexure iii to 3CD report, being annual statement of accounts of the assessee in regard to the provident fund i.e. employees contribution for Pune Regional office, Nasik Regional Office and Mumbai Headquarter. The assessee either made no payment or there is difference in payment or the payment is made after due date as prescribed under the Provident Fund Act. The Assessing Officer has pointed out the following:- Disallowance on account of difference Rs.65,462/- Disallowance on account of non- payment 1,28,798/- Disallowance on account of payment after due date 9,08,973/- Total 11,03,233/- 15. Hence, the Assessing Officer disallowed the claim of assessee of employees contribution to the provident Fund being paid beyond the due date of prescribed Act amounting to ₹11,03,233/- and added to the returned income of the assessee. Aggrieved assessee preferred the appeal before CIT(A). The CIT(A) allowed the claim of the assessee by observing in Para 5.6 as under: - ITA No. 1829/Mum/2021 A.Y. 2018-19 6 “5.6.1 This ground relates to addition of Rs. 11,03,233/- u/s 36(1)(va) on account of late payment of employees contribution to PF. During the appellate proceeding it has been contended that the same are paid before due date of filing of return. Relying on the case in 53 Taxmann.com 141, CIT vs. Ghatge Patil Transport (BOM) and other jurisdictional judgements, the assessing officer is directed to verify and allow the same if paid before due date of filing the return of income. This ground is allowed subject to verification.” Aggrieved, now Revenue is in appeal before Tribunal. 16. Before us, the learned CIT DR Ms. Mamta Bansal stated that there is no question of allowance of differential payment of ₹65,462/- which has never been paid by the assessee and the amount which are not paid by the assessee amounting to ₹1,28,798/- being claimed on account of employees contribution of provident fund. The balance amount of ₹9,08,873/- was paid after the due date as prescribed under the provident fund Act. She stated that the Assessing Officer clearly brought out the amount due and amount paid. Now, the learned CIT DR further stated that there is an amendment in the Provisions of Section 36(va), wherein explanation 2 was added by the Finance Act 2021, with effect from 01.04.2021 and the relevant explanation read as under: - “[Explanation-2- For the removal of doubts, it is hereby clarified that the provisions of section 43B shall not apply and shall be deemed never to have been applied for the purposes of determining the “due date” under this clause;] 17. The learned CIT DR stated that this is only clarificatory explanation and normal presumption is that these provisions have been in the Act from the very inception, once it is clarificatory for this, ITA No. 1829/Mum/2021 A.Y. 2018-19 7 she relied on CIT v. Podar Cement (Pvt.) Ltd. [1997] 226 ITR 625 (SC) and CIT vs. Gold Coin Health Food (P.) Ltd [2008] 304 ITR 308 (SC). 18. On the other hand, the learned Counsel for the assessee relied on the decision of Hyderabad Bench of ITAT in the case of Salzgitter Hydraulics (P.) Ltd. Vs. ITO (2021) 128 taxmann.com 192 (Hyderabad – Trib.) dated 15.06.2021, wherein it is held that the provident fund contribution received from employees deposited by assessee before the due date of filing of return under section 139(1) of the Act but after the due date prescribed in the relevant statute of provident Fund Act is to be allowed despite the fact that legislation has not only incorporated necessary amendment in section 36(1)(va) of the Act by inserting explanation 2 as well as explanation 5 to section 43B vide Finance Act, 2021 with effect from 01.04.2021, wherein it is clarified that the provisions of section shall not apply and shall be deemed to have been applied to a sum received by assessee from any of his employees covered by section 2(24)(x) of the Act because this explanations are prospective and not retrospective. The relevant Para 2 of the case reads as under: - “2. Coming to the sole substantive issue of ESI/PF disallowance of Rs.1,09,343/- and Rs. 3,52,622/-, the assessee's and revenue's stand is that the same has been paid before the due date of filing sec. 139(1) return and after the due date prescribed in the corresponding statutes; respectively. I notice in this factual backdrop that the legislature has not only incorporated necessary amendments in Sections 36(va) as well as 43B vide Finance Act, 2021 to this effect but also the CBDT has issued Memorandum of Explanation that the same applies w.e.f. 1-4-2021 only. It is further not an issue that the forergoing legislative amendments have proposed employers contributions; disallowances ITA No. 1829/Mum/2021 A.Y. 2018-19 8 u/s 43B as against employee u/s 36 (va) of the Act; respectively. However, keeping in mind the fact that the same has been clarified to be applicable only with prospective effect from 1-4-2021, I hold that the impugned disallowance is not sustainable in view of all these latest developments even if the Revenue's case is supported by the following case law.” 19. In view of the above, we are of the view that the legislative amendments incorporated in section 36(1)(va) and 43B of the Act by the Finance Act, 2021 by inserting explanation 2 and explanation 5 to the respective provisions, are prospective in application with effect from 01.04.2021. Hence, we find no infirmity in the order of Commissioner of Income Tax (Appeals). Hence, the appeal of the Revenue is dismissed.” 6. Since the issue is duly been covered with the decision of M/s. Maharashtra Tourism Development Corporation Ltd.(supra) therefore, we are of the view that the finding of the Ld. CIT(A) is not justifiable, hence, is hereby ordered to be set aside and these issues are decided against the Revenue and in favour of the assessee. 7. In the result, the appeal filed by the assessee is hereby allowed. Order pronounced in the open court on 28/04/2022. Sd/- Sd/- (S. RIFAUR RAHMAN) (AMARJIT SINGH) लेखध सदस्य / ACCOUNTANT MEMBER न्यधनिक सदस्य/JUDICIAL MEMBER मुंबई Mumbai; दिनांक Dated : 28/04/2022. Vijay Pal Singh (Sr. P.S.) ITA No. 1829/Mum/2021 A.Y. 2018-19 9 आदेश की प्रनिनलनि अग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. 3. आयकर आयुक्त(अपील) / The CIT(A)- 4. आयकर आयुक्त / CIT 5. दवभागीय प्रदतदनदि, आयकर अपीलीय अदिकरण, मुंबई / DR, ITAT, Mumbai 6. गार्ड फाईल / Guard file. आदेशधिुसधर/ BY ORDER, सत्यादपत प्रदत //True Copy// उि/सहधिक िंजीकधर /(Dy./Asstt. Registrar) आिकर अिीलीि अनर्करण, मुंबई / ITAT, Mumbai