Integrity Verification Services Private Limited, Mumbai V. Income Tax Officer, Ward 3(2)(1), Mumbai, Mumbai

ITA 1843/MUM/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 3480 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2018-2019
• Appeal Filed On: 11-10-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 154; 43B; 48

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI M. BALAGANESH, AM AND MS. KAVITHA RAJAGOPAL, JM IT A N o. 1 84 3/ Mu m /20 21 (As se ss me nt Y ea r: 20 18- 19 ) Integrity Verification Services Private Limited 11, Tulsani Chambers, Nariman Point, Mumbai-400 021 Vs. Income Tax Officer Ward-3(2)(1), Mumbai PA N/ GI R No . AA C CG 1 28 1 A (Appellant) : (Respondent) Appellant by : Shri Gyaneshwar Kataram Respondent by : Shri R. A. Dhyani Dat e of H ea ri ng : 12.04.2022 Dat e of P ro no un ce me nt : 28.04.2022 O R D E R Per Kavitha Rajagopal, J. M.: This present appeal filed by the assessee company is against the order passed by the learned Commissioner of Income Tax (Appeals) (‘ld.CIT(A) for short), National Faceless Appeal Centre (‘NFAC’ for short) dated 22.09.2021, pertaining to the Assessment Year (A.Y. for short) 2018-19. 2. The solitary issue raised by the assessee company is the disallowance of Rs.5,28,900/- u/s.36(1)(va) with regard to the employee’s contribution to provident fund and ESIC which was paid after the prescribed due date, but before the due date of filing of return of income. The other grounds of appeal are relatively interconnected to the substantial issue. 3. The brief facts of the case are that the assessee company is engaged in the business of investigation and specialization in employee background, screening and risk investigation services. The assessee company filed its return of income on 05.10.2018 declaring total loss at Rs.83,53,130/- for the A.Y. 2018-19. The assessment was completed u/s.143(1) of the Income Tax Act, 1961 on 11.01.2020 and intimation u/s.143(1) was issued on 21.01.2020. Subsequent to this, the assessee company filed 2 I T A N o . 1 8 4 3 / M u m / 2 0 2 1 ( A . Y . 2 0 1 8 - 1 9 ) Integrity Verification Services Private Limited vs. ITO application u/s.154 on 23.09.2020 and order u/s. 154 dated 20.10.2020 was passed by the Assessing Officer (A.O. for short), CPC. Further to this notice u/s. 143(1)(a) dated 10.05.2019 was received with regard to disallowance of expenditure specified in the audit report that sum received from employees contribution to PF/superannuation fund or any fund set up under the ESIC Act/any other fund for the welfare of the employees as not credited to the employees account on or before the due date u/s.36(1)(va). The reply of the assessee company to the A.O., CPC online was not accepted and total loss was calculated at Rs.78,24,230/- after making addition of Rs.5,28,900/- as disallowance u/s.36(1)(va) of the Act. 4. Aggrieved by the said order, the assessee company filed an appeal before the ld. CIT(A) against the disallowance of the employees contribution fund of Rs.5,28,900/- paid after the due date. The ld. CIT(A) dismissed the said application on the ground that the amendment brought about in the Finance Act, 2021 was not relevant to Employee’s Contribution as per Explanation 5 to Section 43B and Explanation 2 to Section 36(1)(va) and relied on various decisions to substantiate it. 5. The assessee company is in appeal before us against the impugned order passed by the lower authorities. The ld. AR contended that though there was delay in deposit of PF after the due date specified in the respective Acts of PF and ESIC, it was remitted before the due date for filing of return u/s. 139(1). The ld. AR submitted that various decisions of Hon’ble Jurisdictional High Court and other High Court’s have reiterated that if the assessee has complied with the obligation of payment towards employee’s contribution before the due date for filing of return, the deductions are to be allowed u/s. 36(1)(va) of the Act. A plethora of judgment was being cited by the ld. AR. 6. The ld. Departmental Representative (ld. DR for short), on the other hand, relied upon the orders of the lower authorities and contended that section 43B is not applicable to employee’s contribution and relates only to Employer’s Contribution and that prospective applicability as per Finance Act, 2021 was not applicable to the present case in hand. 3 I T A N o . 1 8 4 3 / M u m / 2 0 2 1 ( A . Y . 2 0 1 8 - 1 9 ) Integrity Verification Services Private Limited vs. ITO 7. We have perused the material available on record and considered the contentions of both the sides. It is observed that the A.O. has disallowed the deposit of employee’s contribution towards PF & ESIC totaling to Rs.5,28,900/- on the ground that it was paid after the due date specified under the relevant Act and the A.O. has made addition of the said amount u/s.36(1)(va) read with section 2(24)(x) of the Act. The plea of the assessee that it has paid the said amount before filing of the return of income was not considered by the A.O. and as well as the ld. CIT(A), NFAC. The assessee has relied on the decision of the Hon’ble Apex Court in the case of CIT vs. Alom Extrusions Ltd, [2009] 185 Taxmann 416 (SC), CIT vs. Rajasthan State Beverages Corporation Ltd (2017) 84 taxmann.com 185 (SC) and the Hon’ble Jurisdictional High Court decision in the case of CIT v/s Hindustan Organics Chemicals Limited [2014] 48 taxmann.com 421 (Bom); Ghatge Patil Transports Ltd. [2015] 53 taxmann.com 141, M/s. Geekay Security Services Pvt. Ltd. vs. The Dy. CIT and several other decisions which reiterated the preposition that the employee’s contribution if paid before the due date for filing of income tax return is entitled to deductions and in the case of Ghatge Patil Transports Ltd. (supra) it is held that the amendment to section 43B is applicable both to employer’s and employee’s contribution. It is also evident that the amendment made to section 36(1)(va) r.w.s. 43B of the Act is prospective in nature and applicable only from A.Y. 2022-23 as per the Finance Act, 2021 and does not apply retrospectively. 8. Thus, from the above observations we are of the considered opinion that the disallowance of employee’s contribution fund of Rs.5,28,900/- paid after the due date prescribed by the relevant act before the due date for filing of return of income u/s.139(1) of the Act is to be deleted. 9. In the result, the appeal filed by the assessee is allowed in terms of the above observations. Order pronounced in the open court on 28.04.2022 Sd/- Sd/- (M. Balaganesh) (Kavitha Rajagopal) Accountant Member Judicial Member Mumbai; Dated : 28.04.2022 Roshani , Sr. PS 4 I T A N o . 1 8 4 3 / M u m / 2 0 2 1 ( A . Y . 2 0 1 8 - 1 9 ) Integrity Verification Services Private Limited vs. ITO Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER, (Dy./Asstt. Registrar/Sr. Private Secretary) ITAT, Mumbai