ACIT, Circle-6(2), New Delhi V. Cushman & Wakefield Property Management Services India Pvt. Ltd., New Delhi

ITA 9646/DEL/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 5456 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-07-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Appeal Filed On: 18-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANGEETA YADAV
• Keywords: Question of law
• Section: 43B; 139; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘B’ NEW DLEHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI N.K. CHOUDHRY, JUDICIAL MEMBER ITA No. 9646/Del/2019 Assessment Year: 2017-18 ACIT, Circle 6(2), New Delhi. VersuS Cushman & Wakefield Property Management Services India Pvt. Ltd., 11 th Floor, JA-1120-1121, Tower A, DLF Tower, Jasola, District Centre New Delhi. PAN: AACCC3657N (Appellant) (Respondent) Appellant by : Ms.SangeetaYadav, Ld. Sr. DR Respondent by : Sh. RishabhMalhotra, Ld. AR Date of hearing : 07/07/2022 Date of order : 20 /07/2022 ORDER PER N.K. CHOUDHRY, J.M. 1. The Revenue Department has preferred the instant appeal against the order dated 27.09.2019, impugned herein, passed by the learned Commissioner of Income-tax (Appeals)-2, New Delhi (in short “Ld. Commissioner”), u/s. 250 of the Income-tax Act, 1961 (in short ‘the Act’) for the assessment year 2017-18. 2. The Assessee had deposited employees’ contributions qua PF, ESI and other welfare funds after the due date as prescribed in the relevant Acts, however, before the due date of filing of return of income u/s.139(1) of the Act, which resulted into addition ofRs. 1,97,58,882/- and Rs. 8,898/- respectively made by the AO on account of disallowance on the ground that there has been delay in [2] deposit of aforesaid amounts beyond the due date of deposit prescribed under the PF and ESIC Acts. 3. The said disallowance was challenged by the Assessee before the Ld. Commissioner, who vide impugned order, directed the Assessing Officer to verify the actual date of payment with challans and if the payments are made before the due date of filing return, then allow the same. 4. Being aggrieved, the Revenue Department is in appeal before us on the following grounds of appeal: “1. Whether on the facts and circumstances of the case and in law, the ld. CIT(A) is legally justified in holding that the employees’ contribution to the Employees Provident Fund (EPF) and the Employees State Insurance Scheme (ESI) is an allowable deduction u/s. 36(1)(va) of the IT Act, 1961 r.w.s. 43B of the IT Act, 1961 if paid before the due date of filing of return. 2. The appellant craves leave for reserving the right to amend, modify, alter, add or forgo any ground(s) of appeal at any time before or during the hearing of this appeal.” 5. The ld. DR by raising arguments against the impugned order submitted that since the Assessee failed to deposit the employees’ contribution towards PF/ESI within the period stipulated under the relevant statutory Acts, therefore the ld. Commissioner was not justified in deleting the impugned disallowance. Ld. AR, on the other hand, vehemently supported the impugned order. 6. Heard the parties and perused the material available on record. The only question, raised by the Revenue Department, as reflects from the grounds of appeal, which needs adjudication before us, is whether the Assessee is entitled for deduction u/s. 36(1)(va) of the Act, if the employee’s contribution qua ‘PF’ and 'ESI' is deposited by the Assessee to the respective funds after the due dates prescribed in the respective [3] Acts but before the due date of filing of 'Return of Income’ u/s 139 of the Act. 7. Admittedly the Hon’ble Apex Court in the cases of Rajasthan State Beverages Ltd (supra), CIT Vs. Alom Extrusion Ltd (supra) and CIT Vs. Vinay Cement Ltd (supra) clearly held the amount claimed on payment of PF and ESI if deposited on or before due date of filing of return, then the same cannot be disallowed u/s 43B or u/s 36(1)(va) of the Act. 7.1 The Hon’ble Punjab and Haryana High Court in the case of CIT Vs. M/s Hemla Embroidery Mills (P) Ltd. (366 ITR 167) (P&H HC) and in the case of CIT Vs. M/s Mark Auto Industries Ltd. (358 ITR 43) (P&H HC), has clearly held that the Assessee is entitled to claim deduction of employee’s share of ESI& PF u/s.43B of the Act, if the same has been deposited, may be after the due dates prescribed under the relevant statutes but prior to the filing of return of income u/s.139(1) of the Act. 7.2 Jurisdictional High Court as well, in the case of CIT Vs. AIMIL Ltd 321 ITR 508 affirmed the action of the ITAT, in deleting the addition made by the Assessing Officer under Section 36(1)(va) of the Act, on account of employees’ contributions qua Provident Fund and ESI, deposited before the due date of filing of return. 7.3 In the judgment delivered by the jurisdictional High Court in the case of PCIT vs. Pro Interactive Service (India) Pvt. Ltd., (ITA.No.983/2018 order dated 10.09.2018), the decision of the Hon’ble High Court in the case of CIT Versus AIMIL Ltd., (supra), has been followed by holding as under :- “In view of the judgment of the Division Bench of Delhi High Court in Commissioner of [4] 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(24)(x) of the Act. Appeal is dismissed.” 7.4 From the Judgments referred above, it is clear that the Hon’ble Courts have allowed the employees’ contributions qua PF and ESI as expenditure on actual payment, may be made after the due date as prescribed in the relevant Acts, but before the due date of filing of return of income u/s.139(1) of the Act and also not drawn any distinction between the employee’s and employer’s share qua PF & ESI contributions, hence, the conclusion drawn by the ld. Commissioner in directing the Assessing Officer to allow deduction if the payments are found made before due date of filing the return, do not require any interference as the impugned order does not suffers from any perversity, impropriety and/or illegality, consequently issue raised by the Revenue Department is not tenable . [5] 8. In the result appeal filed by the Revenue is dismissed. Order pronounced in open Court on 20/07/2022. Sd/- Sd/- (SHAMIM YAHYA) (N.K. CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER *aks/-