Karimuddin Sani, Delhi V. ADIT, CPC, Bengaluru

ITA 930/DEL/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 8813 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Assessment Year: 2019-2020
• Appeal Filed On: 01-08-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PARAMJIT KHANNA
• Keywords: Deemed to accrue or arise in india; Question of law
• Section: 43B; 142(1); 143(1); 139(1); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “SMC-2” BENCH: NEW DELHI (THROUGH VIDEO CONFERENCING ) BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER ITA No.930/Del/2021 [Assessment Year : 2019-20] Karimuddin Sani, 64, Gali Kababian, Jama Masjid, Delhi-110006. PAN-AOEPS7092E vs ADIT, CPC, Bengaluru. APPELLANT RESPONDENT Appellant by Shri Paramjit Khanna, CA Respondent by Shri Om Prakash, Sr.DR Date of Hearing 11.11.2021 Date of Pronouncement 11.11.2021 ORDER PER KUL BHARAT, JM : This appeal filed by the assessee for the assessment year 2019-20 is directed against the order of Ld. CIT(A), National Faceless Appeal Centre “NFAC” dated 31.07.2021. The assessee has raised following grounds of appeal:- 1. “That the learned Commissioner of Income Tax (Appeals) has grossly erred in law and on facts in sustaining the order of intimation so passed by learned Assessing Officer under section 143(1) of the Act and the additions made thereafter, which additions were beyond the scope and jurisdiction of intimation order so passed under section 143(1) of the Act. 2. That the learned Commissioner of Income Tax (Appeals) has further erred in law and on facts by sustaining a disallowance of a sum of Rs. 2,28,545/- on account of payment of employee contribution with regards to PF/ESI/superannuation fund and while sustaining the said disallowance, the learned CIT (A) has failed to appreciate the fact that ITA No.930/Del/2021 [Assessment Year : 2019-20] Page | 2 the payments of the same were made prior to filing of return of income and as such, said expenditure was an allowable expenditure. 2.1. That in doing so, the learned CIT (A) has failed to appreciate the fact that the requisite documents/evidences along with explanations were tendered by assessee, but learned CIT (A) based its decision on preconceived notions and misconceived facts and as such, the disallowance so sustained should be deleted.” 2. The only effective ground in this appeal is against the sustaining of addition of Rs.2,28,545/- on account of payment of employee contribution to PF/ESI/superannuation fund. 3. Facts giving rise to the present appeal are that the case of the assessee was processed u/s 142(1) of the Act. While processing the return of income, the claim of the assessee regarding payment of contribution of employees in respect of Provident Fund and ESI was disallowed on account of delay in payment as per respective dates. 4. Aggrieved against this, the assessee preferred appeal before Ld.CIT(A), confirmed the addition. 5. Now, the assessee is in appeal before this Tribunal. 6. Ld. Counsel for the assessee submitted that the issues raised in this appeal are squarely covered in favour of the assessee. He placed reliance on the decisions of Hon’ble Delhi High Court rendered in the case of PCIT vs Pro Interactive Service (India) Pvt.Ltd. in ITA No.983/2018 [Del.] order dated 10.09.2018 and in the case of CIT vs AIMIL Ltd. 321 ITR 508 and stated that that these binding precedents have been followed by the various Benches of the Tribunal. ITA No.930/Del/2021 [Assessment Year : 2019-20] Page | 3 7. Per contra, Ld. Sr. DR vehemently opposed these submissions and submitted that law is clear in this respect and he relied upon the decision of Ld.CIT(A). He further relied upon the decision of Hon’ble Delhi High Court in the case of CIT vs Bharat Hotels Ltd. [2019] 103 Taxmann.com 295 (Delhi) wherein the Hon’ble High Court has decided the issue in favour of the Revenue by observing as under:- 8. “Having regard to the specific provisions of the Employees‟ Provident Funds Act and ESI Act as well as the concerned notifications which granted a grace period of 5 days (which appears to have been late withdrawn recently on 08.01.2016), we are of the opinion that the ITAT‟s decision in this case was not correct. The assessee undoubtedly was entitled to claim the benefit and properly treat such amounts as having been duly deposited, which were in fact deposited within the period prescribed (i.e. 15 + 5 days in the case of EPF and 21 days + any other grace period in terms of the extent notification). As far as the amounts constituting deductions from employees‟ salaries towards their contributions, which were made beyond such stipulated period, obviously the assessee was not entitled to claim the deduction from its returns.” 8. I have heard the rival submissions and perused the material available on record and gone through the orders of the authorities below. Ld.CIT(A) has decided the issue by observing as under:- 3.2. “I have considered intimation issued by CPC and submission made by appellant. The AO, CPC while processing return of income u/s. 143(1) of the I. T. Act, 1961 has disallowed employee's contribution of Rs.2,28,545/- towards PF/ESI as such payment are made beyond the due date prescribed under the relevant Act. The AO has made such adjustment based upon tax audit report filed along with return of income. ITA No.930/Del/2021 [Assessment Year : 2019-20] Page | 4 3.3 The appellant has contended that since all payments have been made before due date of filing of return of income, addition on account of same cannot be made in view of provision of section 43B of the Act and relied upon the various judgements. 3.4 on overall consideration of the facts of the case, it was observed that AO has disallowed the employee's contribution towards PF/ESI as payments were deposited beyond the date prescribed in the relevant Act but deposited before the date of filing of return of income u/s. 139(1) of the Act. The Hon'ble Gujarat High Court in the case of Gujarat State Road Transport Corporation (2014) 41 taxman.com 100, as held that employee's contribution not paid within the due date specified under PF/ESI Act is not to be allowed as per section 36(1)(va). 3.5 Furthermore, the Finance Act 2021 (No. 13 of 2021) has now clarified by inserting explanation in section 36 of the Act to the above effect as under: (Explanation 2- For the removal of doubts, it is hereby clarified that the provisions of section 438 shall not apply and shall be deemed never to have been applied for the purposes of determining the "due date" under this clause"). 3.6 In view of the above, the adjustment made by CPC is justified and the ground of appeal is dismissed.” 9. I find merit in the contention of Ld. Counsel for the assessee that the issue is covered by the judgement of Hon’ble Delhi High Court rendered in the case of AIMIL Ltd. (supra) wherein it has been hold:- 17. “We may only add that if the employees’ contribution is not deposited by the due date prescribed under the relevant Acts and is deposited late, the employer not only pays interest on delayed payment but can incur penalties also, for which specific provisions are made in the Provident Fund Act as well as the ESI Act. Therefore, the Act permits the employer to make the deposit with some delays, subject to the aforesaid consequences. Insofar as the ITA No.930/Del/2021 [Assessment Year : 2019-20] Page | 5 Income Tax Act is concerned, the assessee can get the benefit if the actual payment is made before the return is filed, as per the principle laid down by the Supreme Court in Vinay Cement (supra).” 10. Further, Ld. Counsel for the assessee placed reliance on the judgement of Hon’ble Delhi High Court rendered in the case of PCIT vs Pro Interactive Service (India) Pvt.Ltd. in ITA No.983/2018 [Del.] order dated 10.09.2018 held as under:- “In view of the judgement of the Division Bench of Delhi High Court in Commissioner of Income Tax versus AIMIL Limited, (2010) 321 ITR 508 (Del.) the issue is covered against the Revenue and, therefore, no substantial question of law arises for consideration in this appeal. The legislative intent was/is to ensure that the amount paid is allowed as an expenditure only when payment is actually made. We do not think that the legislative intent and objective is to treat belated payment of Employee’s Provident Fund (EPD) and Employee’s State Insurance Scheme (ESI) as deemed income of the employer under section 2(23)(x) of the Act.” Therefore, respectfully following the ratio laid down by the Hon’ble Jurisdictional High Court in the above-mentioned binding precedents, I hereby direct the Assessing Officer to delete the disallowance. Thus, grounds raised by the assessee are allowed. 10. In the result, the appeal of the assessee is allowed. Above decision was pronounced on conclusion of Virtual Hearing in the presence of both the parties on 11 th November, 2021. Sd/- (KUL BHARAT) JUDICIAL MEMBER ITA No.930/Del/2021 [Assessment Year : 2019-20] Page | 6 *Amit Kumar* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI