SILA SOLUTIONS PVT LTD, MUMBAI V. DCIT CPC BANGALORE, MUMBAI

ITA 813/MUM/2022

• Counselvise Citation: [2022] 107 COUNSELVISE.COM (IT) 0534 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2018-2019
• Appeal Filed On: 27-04-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 43B; 143(1); 44AB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “H”, MUMBAI BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER ITA No.813/M/2022 Assessment Year: 2018-19 M/s. Sila Solutions Pvt. Ltd., 3 rd Floor, A-301, Neelam Centre, Baburao Pendharkar Marg, Glaxo, Worli, Mumbai City– 400 030 PAN: AANCS3675D Vs. Dy. Commissioner of Income Tax-CPC, Bangalore, Karnataka – 560 500 (Appellant) (Respondent) Present for: Assessee by : Shri Mandar Vaidya, A.R. Revenue by : Shri Tejinder Pal Singh, D.R. Date of Hearing : 11 . 07 . 2022 Date of Pronouncement : 04 . 08 . 2022 O R D E R Per : Kuldip Singh, Judicial Member: The appellant, M/s. Sila Solutions Pvt. Ltd. (hereinafter referred to as ‘the assessee’) by filing the present appeal, sought to set aside the impugned order dated 29.09.2021 passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter referred to as CIT(A)] qua the assessment year 2018-19 on the grounds inter alia that: “1. The Ld. CIT(A) fell in error of law In not appreciating that Expln 2 to scc.36 (l)(va) inserted by Finance Act 2021 has been made applicable w.e.f A.Y. 2021-22 and has no retrospective effect. It is submitted that the memorandum explaining Finance Bill 2021 states that the amendment will take effect from 1.4 2021 and will ITA No.813/M/2022 M/s. Sila Solutions Pvt. Ltd. 2 accordingly apply from A.Y. 2021-22 and subsequent assessment year. 2. The Ld CIT(A) erred in not appreciating that the disallowance made in an intimation u/s. 143(1) of the Act, was beyond the scope of the adjustments contemplated under sec. 143(1) of the Act. 3. The Ld. CIT(A) failed to appreciate that clause 20(b) of the tax audit report simply requires the tax auditor to submit data and does not require the auditor to express any opinion on whether any amount is allowable or not 4. The Ld. CIT(A) fell in error of law in not appreciating that the amounts could not be disallowed u/s, 36(l)(va) of the Act since the same were deposited before the due date of filing the income tax return, which was in compliance with the prevailing law.” 2. Briefly stated facts necessary for adjudication of the controversy at hand are : during the assessment proceedings Assessing Officer (CPC), Bangalore has disallowed employees contribution to Provident Fund (PF) and Employees’ State Insurance Corporation (ESIC) to the tune of Rs.2,25,94,571/- paid by the assessee during the year under consideration after the due date prescribed under PF/ESIC Act. Consequently, the AO made the addition of Rs.2,25,94,571/- under section 36(2)(va) of the Act. 3. Assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has confirmed the addition by dismissing the appeal. Feeling aggrieved from the impugned order passed by the Ld. CIT(A) the assessee has come up before the Tribunal by way of filing present appeal. 4. We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and the case law relied upon. ITA No.813/M/2022 M/s. Sila Solutions Pvt. Ltd. 3 5. Undisputedly, the assessee has deposited payment towards the Employees contribution of PF & ESI after due date prescribed in the relevant Act but before the due date of filing income tax return i.e. 12.102.2018 as is evident from the tax audit report filed under section 44AB of the Act available at page 18 to 25. 6. By now the issue raised before the Bench “as to whether payment deposited by the employer towards the employees’ contribution of PF & ESIC after due date prescribed under the relevant Act but prior to the date of income tax return is an allowable deduction” has already been decided by the Hon’ble Bombay High Court in case CIT V. Ghatge Patil Transporters Ltd. 368 ITR 749 by confirming the order passed by the Tribunal that the deduction claimed by the assessee on account of employees contribution to PF & ESIC well before the due date of filing return of income is allowable deduction as the amended provisions brought out in the statute are applicable from A.Y. 2021-22 only, meaning thereby section 36(1)(va) of the Act is to be construed only as prospective in operation, hence not applicable to the year under consideration. 7. Hon’ble High Court of Bombay in case of Ghatge Patil Transporters Ltd. (supra) held that both employees’ and employer’s contribution are covered under amendment to section 43B and covered under judgment of Hon’ble Supreme Court in case of CIT vs. Alom Extrusions Ltd. (2009) 319 ITR 306 and such deduction claimed by the assessee is allowable. 8. Co-ordinate Bench of the Tribunal in case of M/s. Adyar Ananda Bhavan Sweets India P. Ltd. vs. ACIT (supra) also decided ITA No.813/M/2022 M/s. Sila Solutions Pvt. Ltd. 4 the identical issue in favour of the assessee by holding that the payment of employees contribution qua PF & ESIC if made before the due date of filing of return of income, the same is allowable deduction as per provisions of Section 2(24)(x) r.w.s. 36(1)(va) r.w.s. 43B of the Act. 9. In view of what has been discussed above, we are of the considered view that since the amended provisions contained under section 43B read with section 36(1)(va) of the Act are not applicable for the year under consideration i.e. A.Y. 2018-19 as the amendment will be effective from A.Y. 2021-22 and the AO/ Ld. CIT(A) have erred in disallowing the same. Consequently, impugned order passed by the Ld. CIT(A) is set aside and appeal filed by the assessee is allowed. Order pronounced in the open court on 04.08.2022. Sd/- Sd/- (GAGAN GOYAL) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 04.08.2022. * Kishore, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT (A) Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai.