Inox Leisure Ltd., Baroda V. The DCIT, Circle-1(1)(1), Baroda

ITA 23/AHD/2022

AI Insights

The case involves Inox Leisure Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi, concerning the disallowance of Rs.39,51,660 for delayed payment of employees' contribution to PF for the assessment year 2018-19. The delay was only for one day due to technical issues on the EPF site. The Tribunal considered the evidence provided by the assessee, including communications with the Regional Provident Fund Commissioner, and found that the delay was not due to the assessee's fault but due to a technical glitch on the EPF site.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 133556 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 18-04-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 26-01-2022
• Other Referred Cases: Pr.CIT Vs. Gujarat Flurochemicals Ltd., Checkmate Services P. Ltd. v. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 43B

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘C’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, VICE-PRESIDENT AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No.23/Ahd/2022 Assessment Year : 2018-19 Inox Leisure Ltd. 5 th Floor, Viraj Towers Nxt To Andheri Flyover Western Express Highway Andheri (East)-400093. PAN : AAACI 6063 J Vs. DCIT, Cir.1(1)(1) Baroda. (Applicant) (Responent) Assessee by : Shri Bandish Soparkar, AR Revenue by : Shri Rakesh Jha, Sr.DR स ु नवाई क तार ख/D a t e o f H e a r i n g : 1 9 / 0 4 / 2 0 2 3 घोषणा क तार ख /D a t e o f P r o n o u n c e m e n t : 0 5 / 0 7 / 2 0 2 3 आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER Present appeal has been filed by the assessee against the order of the ld.Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi dated 29.12.2021 passed under section 250(6) of the Income Tax Act, 1961 (hereinafter referred to as “the Act” for short) for the Asst.Year 2018-13. 2. Short issue in the present appeal relates to disallowance of employees’ contribution to PF on account of delay in payment of the same to the relevant fund, applying the provisions of section 36(1)(va) of the Act. The amount of contribution disallowed was Rs.39,51,660/- and the grounds raised in this regard are as under: ITA No.23/Ahd/2022 2 “1. The CIT(A), NFAC has erred in confirming the disallowance of Rs.39,51,660/- u/s.36(1)(va) on account of delay in payment of employee contribution to PF when the delay was only for one day and due to technical issue on EPF site due to which the payment could not be made on the due date.” 3. The sole contention of the ld.counsel for the assessee was that the contribution so deposited delayed pertained to the month of May 2017 and was delayed only byone day, that too, on account of technical glitches in EPF site, dueto which the payment could not be made on due date and was made immediately thereafter on the next date. As evidence of the same, he drew our attention to communication of the assessee addressed to the Regional Provident Fund Commissioner for certification of delayed payment of EPF due to technical error. The contents of the same are reproduced hereunder: ITA No.23/Ahd/2022 3 4. Referring to the above, the ld.counsel for the assessee pointed out that it was pointed to the Regional provident Fund Commissioner that on-line payment towards PF contribution for the month of May, 2017 could not be made on due date since EPF website was not working properly and was getting disconnected; that this technical glitch in the site kept occurring from 12.6.2017 when the assessee attempted depositing the contribution , to 14.6.2017, and accordingly, the issue was immediately brought to the notice of PF Commissioner on 15.6.2017 along with screen-shot of the site error; that ultimately, it was only on 16.6.2017 at 9:32am, payment challan for the contribution made to the fund could be generated. The assessee drew our attention also to the email communication sent to the PF Commissioner Office on 15.6.2017 at 4:45pm, pointing out that they were unable to upload the PF Challan for the month of May, 2017 till 12 th June, 2017 due to server issue. All these evidences were placed before us at PB Page nos.3 to 9. The ITA No.23/Ahd/2022 4 ld.counsel for the assessee thereafter drew our attention to the decision of the Hon’ble jurisdictional High Court in the case of Pr.CIT Vs. Gujarat Flurochemicals Ltd. wherein in an identical issue of delayed payment of employees’ contribution to ESI & PF due to certain technical reasons, the Hon’ble High Court upheld the order of the ITAT deleting the addition made under section 36(1)(va) of the Act. The relevant portion of the orderof the Hon’ble Court at para 28 and 29 are as under: “28. The sixth question proposed by the revenue is with respect to the disallowance on account of the late payment of employees contribution towards the PF/ESI under section-36(l)(va) r/w. 2(24)(x). The findings of the ITAT in this regard are as under :- 45. After considering submissions of the both the sides, we find that though the Hon'ble Gujarat High Court in the case of Gujarat State Road Transport Corporation (supra) has held that if the payment to PF and ESI are not being made within the due date prescribed under those Act, then deduction will not be available to the assessee. However, in the present case, so far as payment of Rs.21,47,672/- is concerned, from the explanation of the assessee, it is discernible that it has made payment before the due date, but on account of certain technical objection, cheques deposited have been returned, which ultimately after removal of objection was cleared. Thus, it could be construed that payment was within the due date and therefore, deduction ought to be granted to the assessee. We allow the claim of the assessee qua Rs.21,47,672/-/ 46. So far as payment of Rs.17,22,105/- and Rs.15,121/- are concerned, we find that the Revenue authorities have not verified the details furnished by the assessee. The reasons explained by the assessee cannot be bruised aside. Therefore, we send back the issue of addition qua these two payments to the file of AO for verification of the details of payments. If on verification the reasons assigned by the assessee are found to be correct, then, the AO is directed to give benefit of section 43B of the Act to the assessee. 29. We take notice of the fact that the ITAT answered this question in favour of the assessee keeping in mind the peculiar facts and circumstances of the case. Though the decision of this Court in the case of GSRTC (supra) is against the assessee.” ITA No.23/Ahd/2022 5 5. The ld.DR however stated that the issue is squarely covered against the assessee by the decision of Hon’ble Apex Court in the case of Checkmate Services P. Ltd. v. CIT, (2022) 143 taxmann.com 178 as per which, even a single days delay would attract disallowance as per the provisions of section 36(1)(va) of the Act. 6. We have heard both the parties. It is not disputed that the delay in payment of employees’ contribution to PF in the present case of Rs.39,51,660/- was of one day only i.e. the delay related to the employees’ contribution for the month of May, 2017 which was to be deposited by 15 th June, 2017, but was deposited by the assessee on 16 th June, 2017. The assessee had demonstrated to the Ld.CIT(A) that this delay of one day was not attributable to the assessee, but was due to technical failurein the software system of the relevant fund itself, wherein online payment of contribution could not be made on account of certain technical glitches which persisted right from 12.6.2071 to 14.6.2017. The assessee attempted to make payments from 12.6.2017, i.e before the due date, and could not do so till 14.6.2017, when finally on 14.6.2017, it was able to upload the ECR at 9:40 am, and thereafter generated a combined challan on the next day i.e. 15.6.2017 at 9:25am and the acknowledgment slip from EPFO was generated only on 16.6.2017 at 9:32 am. The assessee had communicated this technical problem faced by it for making payment of the contribution to the concerned department by way of email which was sent on 15.6.2017 itself, when it was unable to make payment on the due date. All evidences in this regard by way of email sent on 15 th June 2017 to the PF authorities intimating the inability to upload the relevant challan for payment, and the letter written by the assessee to the RPF Commissioner for certifying delay in payment of May dues due to ITA No.23/Ahd/2022 6 technical glitches in the site of the Fund has been filed.Therefore, considering the facts of the case, there is, in fact no delay on the part of the assessee in depositing the employees’ contribution to the relevant fund account, and the delay if at all is attributed to the concerned department itself. In these facts and circumstances, it is to be construed that the assessee had deposited the employees’ contribution to the relevant fund within the due dates prescribed warranting no disallowance u/s 36(1)(va) of the Act. 7. We draw support from the decision of the Hon’ble jurisdictional high Court in the case of Gujarat Flurochemicals Ltd. (supra) wherein in the backdrop of identical facts where the payment to ESI/PF was found to be made within the due date but was delayed on account of certain technical objections due to which the cheques were returned, it was held that the payment is such circumstances was to be construed as within the due date and no disallowance be made u/s 36(1)(va) of the Act. The relevant portion of the order is as under: “28. The sixth question proposed by the revenue is with respect to the disallowance on account of the late payment of employees contribution towards the PF/ESI under section-36(l)(va) r/w. 2(24)(x). The findings of the ITAT in this regard are as under :- 45. After considering submissions of the both the sides, we find that though the Hon'ble Gujarat High Court in the case of Gujarat State Road Transport Corporation (supra) has held that if the payment to PF and ESI are not being made within the due date prescribed under those Act, then deduction will not be available to the assessee. However, in the present case, so far as payment of Rs.21,47,672/- is concerned, from the explanation of the assessee, it is discernible that it has made payment before the due date, but on account of certain technical objection, cheques deposited have been returned, which ultimately after removal of objection was cleared. Thus, it could be construed that payment was within the due date and therefore, deduction ought to be granted to the assessee. We allow the claim of the assessee qua Rs.21,47,672/-/ 46. So far as payment of Rs.17,22,105/- and Rs.15,121/- are concerned, we find that the Revenue authorities have not verified the ITA No.23/Ahd/2022 7 details furnished by the assessee. The reasons explained by the assessee cannot be bruised aside. Therefore, we send back the issue of addition qua these two payments to the file of AO for verification of the details of payments. If on verification the reasons assigned by the assessee are found to be correct, then, the AO is directed to give benefit of section 43B of the Act to the assessee. 29. We take notice of the fact that the ITAT answered this question in favour of the assessee keeping in mind the peculiar facts and circumstances of the case. Though the decision of this Court in the case of GSRTC (supra) is against the assessee.” In view of the above, the disallowance made of employees’ contribution to fund amounting to Rs.39,51,660/- is directed tobe deleted. 8. In the result, appeal of the assessee is allowed. Order pronounced in the Court on 5 th July, 2023 at Ahmedabad. Sd/- Sd/- (RAJPAL YADAV) VICE-PRESIDENT (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad, dated 05/07/2023