M/s. Apollo Hospitals Enterprises Ltd., CHENNAI V. ACIT,Central Circle -3(1), , CHENNAI

ITA 691/CHNY/2022

AI Insights

The case involves M/s. Apollo Hospitals Enterprise Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals)-18, Chennai, concerning the assessment year 2020-21. The primary contention was the disallowance of Rs.36,80,708, which represented belated remittances of employees' contributions to PF & ESI under section 36(1)(va) of the Income Tax Act, 1961. The assessee argued that the contributions were made before the due dates for filing the return of income, and any delay in bank processing should not affect the deductibility of these contributions. The Tribunal's decision focused on whether the payments were made on the due dates, considering the impact of holidays on the actual debit dates by the bank.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127946 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 27-02-2023
• Assessment Year: 2020-2021
• Appeal Filed On: 15-08-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 143(1)

Judgement Text

आयकर अपील सं./ITA No.691/Chny/2022 िनधा रण वष /Assessment Year: 2020-21 M/s.Apollo Hospitals Enterprise Ltd., Shafee Mohammed Road, Thousands Lights, Chennai-600 006. v. The Asst. Director- of Income Tax, CPC, ITD, Bengaluru-560 500. [PAN: AAACA 5443 N] (अपीलाथ /Appellant) ( यथ /Respondent) अपीलाथ क ओर से/ Appellant by : Mr.H. Yeshwanth Kumar, CA यथ क ओर से /Respondent by : Mr.P. Sajit Kumar, JCIT सुनवाई क तारीख/Date of Hearing : 28.02.2023 घोषणा क तारीख /Date of Pronouncement : 28.02.2023 आदेश / O R D E R PER MANJUNATHA.G, AM: This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-18, Chennai, dated 15.06.2022 and pertains to assessment year 2020-21. 2. The assessee has raised the following grounds of appeal: 1. For that the order of the Commissioner of Income Tax (Appeals) is contrary to law, facts and circumstances of the case to the extent prejudicial to the interests of the appellant and is opposed to the principles of equity, natural justice and fair play. 2. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the intimation u/s. 143(1) is without jurisdiction. 3. For that the Commissioner of Income Tax (Appeals) erred in upholding the disallowance of Rs.36,80,708/-, being aggregate of belated remittances of employees' contributions to PF & ESI u/s.36(1 )(va). आयकर अपीलीय अिधकरण, ’सी’ यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH: CHENNAI ी वी. दुगा राव, माननीय ाियक सद एवं ी मंजूनाथा .जी, माननीय लेखा सद के सम BEFORE SHRI V. DURGA RAO, HON’BLE JUDICIAL MEMBER AND SHRI MANJUNATHA. G, HON’BLE ACCOUNTANT MEMBER ITA No.691/Chny/2022 :: 2 :: 4. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the employees' contributions to the PF & ESI were remitted before the due date for filing the return of income of the appellant for the impugned assessment year. 5. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the payment of employees' contribution to PF & ESI within due date of filing the return of income is an allowable expenditure. 6. For that, without prejudice to the above, the Commissioner of Income Tax (Appeals) failed to appreciate that the issue of allowability of employees' contribution to PF & ESI within the due date of filing return of income is; a^ debatable one and the disallowance on that ground cannot be made while processing return of income u/s. 143(1). PRAYER For these grounds and such other grounds that may be raised, may be altered, amended or modified, with the leave of the Hon'ble Tribunal before or during the hearing of the appeal, it is most humbly prayed that the Hon'ble Tribunal may be pleased to: a) Quash the Intimation passed u/s.143(1) and / or b) Delete the disallowance made u/s.36(1 )(va) and / or c) Pass such other orders as the Hon'ble Tribunal may deem fit. 3. The brief facts of the case are that the assessee is a company engaged in health care services filed its return of income for the AY 2020- 21 on 31.03.2021 declaring total income of Rs.6,26,52,29,740/-. The return of income filed by the assessee has been processed u/s.143(1) of the Income Tax Act, 1961 (in short “the Act") on 30.12.2021 and disallowed employees’ contribution to PF & ESI u/s.36(1)(va) of the Act, for Rs.36,80,708/-. The assessee carried the matter in appeal before the First Appellate Authority, but could not succeed. The Ld.CIT(A) for the reasons stated in their appellate order dated 15.06.2022 rejected the arguments of the assessee and sustained the additions towards employees’ contribution towards PF & ESI u/s.36(1)(va) of the Act. 4. The Ld.AR for the assessee referring to payment details for PF submitted that in respect of Sl.No.7 & 9 of table reproduced in Page Nos.8 ITA No.691/Chny/2022 :: 3 :: & 9 of the order of the Ld.CIT(A) submitted that the assessee has remitted contribution for the month of October on or before due date for payment on 15.11.2019. However, because of Sunday, the bank has debited the amount to the account of the assessee on 16.11.2019. Similarly, in respect of Sl.No.9, it has remitted amount on 15.08.2019, but because of Holiday on 15.08.2019, the bank has debited the amount to the account of the assessee on 16.08.2019. As per General Clauses Act, if due date falls under any holiday, the payment made on next day should be treated as paid on due date and thus, the AO may be directed to verify and allow the deduction u/s.36(1)(va) of the Act. 5. The Ld.DR, on the other hand, supporting the order of the AO & the Ld.CIT(A), submitted that the AO, CPC has computed disallowance as per Tax Audit Report, where it has been clearly stated that contribution for the month of October has been belatedly paid under respective act. Therefore, there is no error in the order of the Ld.CIT(A) and their orders should be upheld. 6. We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. In so far as payment of Rs.12,80,121/- towards employees’ contribution towards PF & ESI for the month of October, 2019, the assessee claims to have paid the amount on or before 15.11.2019. However, because 15.11.2019 is Sunday, the bank has debited the amount to the account of the assessee on 16.11.2019 and that basis, the Tax Auditor reported the payment date ITA No.691/Chny/2022 :: 4 :: as 16.11.2019. Similarly, PF contribution of Rs.17,080/- for the month of July, 2019 claims to have been paid on or before 15.08.2019, but because of Independence Day holiday on 15.08.2019, the bank has debited the amount to the account of the assessee on 16.08.2019. If the claim of the assessee is correct, then as per General Clauses Act, the next day of payment should be treated as paid as on due date. Therefore, we direct the AO to verify the claim of the assessee in light of necessary evidences and also keeping in mind the General Clauses Act and in case, the AO found that the assessee has made the payment on or before due date, but because of holiday on that date, if the bank has debited the amount to the account of the assessee on the next date, then the payment made by the assessee should be treated as paid on or before due date specified under respective Act and allow the deduction as claimed by the assessee. 7. In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced on the 28 th day of February, 2023, in Chennai. Sd/- (वी. दुगा राव) (V. DURGA RAO) याियक सद य/JUDICIAL MEMBER Sd/- (मंजूनाथा.जी) (MANJUNATHA.G) लेखा सद य/ACCOUNTANT MEMBER चे ई/Chennai, दनांक/Dated: 28 th February, 2023. TLN आदेश क ितिलिप अ ेिषत/Copy to: 1. अपीलाथ /Appellant 4. आयकर आयु"/CIT 2. यथ /Respondent 5. िवभागीय ितिनिध/DR 3. आयकर आयु" (अपील)/CIT(A) 6. गाड फाईल/GF