SIMPLE LOGIC IT PRIVATE LTD, MUMBAI V. CIT (A) NFAC, MUMBAI

ITA 1831/MUM/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 4177 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2019-2020
• Appeal Filed On: 07-10-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHARTI SINGH
• Keywords: Deemed to accrue or arise in india; Revised return
• Section: 43B; 143(1); 250; 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. 1831/Mum/2021 (निर्धारण वर्ा / Assessment Year: 2019-20) Simple Logic IT Private Limited 10, Arihant, 90 Feet Road, Ghatkopar (E). बिधम/ Vs. CIT(A) National Faceless Appeal Centre (NFAC) स्थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AANCS3390M (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) सुनवाई की तारीख / Date of Hearing: 07/04/2022 घोषणा की तारीख /Date of Pronouncement: 21/04/2022 आदेश / O R D E R PER AMARJIT SINGH, JM: The assessee has filed the present appeal against the order dated 18.08.2021 passed by the National Faceless Appeal (NFAC), Delhi [hereinafter referred to as the “NFAC”] relevant to the A.Y.2019-20. 2. The assessee has raised the following grounds: - “1. The Learned CIT(A)-NFAC, Delhi erred in disallowing claim of ESIC and provident fund even though the payment was made within the due date and added it to the total income of the appellant. 2. The Learned CIT(A)-NFAC, Delhi failed to consider the submission given in tabular form wherein the ESIC and PF paid date wise were given. Assessee by: Shri Ajay Singh Revenue by: Shri Bharti Singh (Sr. AR) ITA. No.1831/Mum/2021 A.Y. 2019-20 2 3. The Learned CIT(A)-NFAC, Delhi failed to consider that the appellant has made payment on and before 15.04.2019 which within the due date as mentioned in Sec.36(1)(va) and much more prior to due date of filing of ROI as the due date for the A.Y.2019-20 which was extended to 31.10.2019 and therefore the assessee is eligible for deduction of payment for ESIC and provident fund provident. 4. The Learned CIT(A)-NFAC, Delhi failed to consider various judgements covering the subject matter. 5. The appellant craves leave to add, to alter, vary or cancel any of the above grounds of appeal.” 3. The brief facts of the case are that the DCIT at the CPC, Bangalore passed an order u/s 143(1) of the Act on 12.05.2020 for the A.Y.2019-20. Thereafter, the appeal was filed on 20.06.2020 which was migrated with National Faceless Appeals Centre in terms of Notification No.76/2020/F.No.370142/33/2020-TPL dated 25.09.2020 issued by the Board. Thereafter, notice u/s 250 of the Act for the submissions on ITBA portal. After filing the return of income by assessee, the return was processed u/s 143(1) of the Act by DCIT at CPC, Bangalore in which the adjustment of Rs.16,26,520/- was issued to the return of income on account of deemed income u/s 36(1)(va) r.w.s. 2(24)(x) of the Act for late deposit of employee’s contribution to PF and ESI in accordance with time lies as specified in statutes governing PF and ESI and interest. The assessee replied to the National Faceless Appeal Centre delay stating therein that the assessee paid the respective fund before the due date of filing of return of ITA. No.1831/Mum/2021 A.Y. 2019-20 3 income. Accordingly, the assessee was entitled to raise as well as allowance of claim in accordance with law. After the reply of the assessee, the matter of consider by authority and explanation of the assessee was declined and an amount of Rs.16,26,250/- was upheld to the income of the assessee. Feeling aggrieved, the assessee has filed the present appeal before us. 4. All the issues are in connection with the disallowance of the claim of the deposit of PF and ESIC. At the very outset, the Ld. Representative of the assessee has argued that the issue is duly covered with the decision of the Hon’ble ITAT in ITA. Nos. 6425/M/2017 for the A.Y.2011-12, 6426/M/2017 for the A.Y.2012-13 & 1140/M/2017 for the A.Y.2014-15 dated 27.07.2021 titled as DCIT Vs. M/s. Maharashtra Tourism Development Corporation Ltd., therefore, the claim of the assessee is liable to be allowed. However, on the other hand, the Ld. Representative of the Department has strongly relied upon the order passed by the National Faceless Appeal Centre in question. The copy of order of ITA. Nos. 6425/M/2017 for the A.Y.2011-12, 6426/M/2017 for the A.Y.2012-13 & 1140/M/2017 for the A.Y.2014-15 dated 27.07.2021 titled as DCIT Vs. M/s. Maharashtra Tourism Development Corporation Ltd. is on the file in which the relevant issue has been adjudicated by Hon’ble ITAT in para no.13 which is hereby reproduced as under: - “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 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 ITA. No.1831/Mum/2021 A.Y. 2019-20 4 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: - “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 ITA. No.1831/Mum/2021 A.Y. 2019-20 5 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, 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 ITA. No.1831/Mum/2021 A.Y. 2019-20 6 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 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.” 5. In view of the above mentioned decision, the issue has now been well settled. The facts of the present case are quite similar to the facts of the case titled as M/s. Maharashtra Tourism Development Corporation Ltd (supra), therefore, relying upon the said decision, we allowed the claim of the assessee. Accordingly, all the issues are decided in favour of the assessee against the revenue. 6. In the result, the appeal filed by the assessee is hereby allowed. Order pronounced in the open court on 21/04/2022 Sd/- /-/ Sd/- (S. RIFAUR RAHMAN) (AMARJIT SINGH) लेखध सदस्य / ACCOUNTANT MEMBER न्यधनिक सदस्य/JUDICIAL MEMBER मुंबई Mumbai; ददनांक Dated : 21/04/2022 Vijay Pal Singh, (Sr. PS) ITA. No.1831/Mum/2021 A.Y. 2019-20 7 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 प्रदतदनदध, आयकर अपीलीय अदधकरण, 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