RADIANT INDUSTRIES,LUDHIANA vs. ITO-WARD-5(3), LUDHIANA
In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that if the employees' contribution to ESI and PF is deposited before the due date of filing the return of income under Section 139(1), it cannot be disallowed under Section 43B read with Section 36(1)(va) of the Act, following various High Court decisions.
What were the facts?
The assessee made late deposits of Employees' Contribution to ESI and EPF. The Assessing Officer disallowed this amount, and the CIT(A) confirmed the disallowance. The assessee appealed to the ITAT.
What were the issues?
Whether disallowance of employees' contribution to ESI and EPF is justified if deposited before the due date of filing the return of income, even if after the statutory due date.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Cases cited in this judgment(6)Show listHide list
Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.
- CIT v. Gujarat State Road Transport Corporation1,158 citing366 ITR 170 · 2014 · HC
- (i) CIT v. Merchem Ltd.631 citing378 ITR 443 · 2015 · HC
- CIT v. Alom Extrusion Ltd.274 citing390 ITR 306 · 2009 · SC
- CIT vs. Gujarat State Road Transport Corporation (2014) 366 ITR 170 (Guj.) (iii) CIT v. South India Corporation Ltd.238 citing242 ITR 114 · 2000 · HC
- Guj.) (iii) CIT vs. South India Corporation Ltd. (2000) 242 ITR 114 (Ker) (iv) CIT v. GTN Textiles Ltd.176 citing269 ITR 285 · 2004 · HC
- State Road Transport Corporation (2014) 366 ITR 170 (Guj.) (iii) CIT v. South India Corporation Ltd.176 citing269 ITR 282 · 2004 · HC
ITA No. 296-Chd-2021
That the Learned Commissioner of Income tax (Appeals) has grossly erred in confirming the addition of Rs. 1083027/- on account of late deposit of Employees Contribution to ESI and EPF on the basis of conjectures, surmises and without appreciating the facts of the case and the provisions of the Act as applicable during the financial year relevant to the assessment year and on date of filing of Income Tax Return. The addition merits deletion.
That the action of the Learned Commissioner of Income tax (Appeals) in confirming the addition of Rs. 1083027/-on account of late deposit of Employees Contribution to ESI and EPF is arbitrary, unwarranted and uncalled for. The addition merits deletion.
That the appellant reserves the right to add, alter or amend grounds of appeal.
That the appellate as well as assessment order are against law & facts of the case.
The only grievance of the assessee relates to the disallowance of Rs. 10,83,027/- made by the A.O. on account of late payments towards ESI and EPF under section 36(1)(va) of the Income Tax Act, 1961 (for short the ‘Act’), however, before furnishing the return of income under section 139(1) of the Act. When the matter was taken to the Ld. CIT(A) the said disallowance was sustained.
Now the assessee is in appeal.
The contention of the Ld. Counsel for the assessee was that the issue under consideration is squarely covered vide common order dated 20/10/2021 passed by the ITAT, Chandigarh Bench in ITA Nos.191 & 192/Chd/2021 for the assessment years 2017-18 & 2018-19 in the case of Raja Ram Vs. ITO, Yamunanagar and in the case of Sanchi Management Services Private Limited Vs. ITO, Chandigarh in ITA No. 190/Chd/2021 for the A.Y. 2018-19. 6. In his rival submissions, the Ld. DR strongly supported the orders of the authorities below and reiterated the observations made by the Ld. CIT(A) in the impugned order.
ITA No. 296-Chd-2021 been made retrospectively. So we are inclined to follow the same and we reproduce the order of Hon’ble Calcutta High Court in the case of Vijayshree Ltd. supra wherein the Hon’ble Calcutta High Court has taken note of the Hon’ble reported in 390 ITR 306. The Hon’ble Calcutta High Court’s decision in Vijayshree Ltd. supra is reproduced as under: “This appeal is at the instance of the Revenue and is directed against an order dated 28th April, 2011 passed by the Income Tax Appellate Tribunal, “A” Bench, Kolkata in ITA No. 1091/Kol/2010 relating to assessment year 2006-07 by which the Tribunal dismissed the appeal preferred by the Revenue against the order of CIT(A). The only issue involved in this appeal is as to whether the deletion of the addition by the AO on account of Employees ‘Contribution to ESI and PF by invoking the provision of Section 36(1)(va) read with Section 2(24)(x) of the Act was correct or not. April, 1988. Such being the position, the deletion of the amount paid by the Employees’ Contribution beyond due date was deductible by invoking the aforesaid amended provisions of Section 43(B) of the Act.
ITA No. 296-Chd-2021 (i) CIT vs. Merchem Ltd, [2015] 378 ITR 443(Ker) (ii) CIT vs. Jairam& Sons [2004] 269 ITR 285 (Ker) The impugned ESI/PF disallowance is directed to be deleted therefore.”
On an identical issue, this Bench of the Tribunal vide order dated 12.8.2021 in the case of Mohangarh Engineers and Construction Company, Jodhpur & Others vs CPC, Banglore in ITA No. 5/Jodh/2021 and others held vide para 13 to 18 as under:- “13. We have heard the rival contentions and perused the material available on record. On perusal of the details submitted by the assessee as part of its return of income, it is noted that the assessee has deposited the employees’s contribution towards ESI and PF well before the due date of filing of return of income u/s 139(1) and the last of such deposits were made on 16.04.2019 whereas due date of filing the return for the impugned assessment year 2019-20 was 31.10.2019 and the return of income was also filed on the said date. Admittedly and undisputedly, the employees’s contribution to ESI and PF which have been collected by the assessee from its employees have thus been deposited well before the due date of filing of return of income u/s 139(1) of the Act.
The issue is no more res integra in light of series of decisions rendered by the Hon’ble Rajasthan High Court starting from CIT vs. State Bank of Bikaner & Jaipur (supra) and subsequent decisions.
In this regard, we may refer to the initial decision of Hon’ble Rajasthan High Court in case of CIT vs. State Bank of Bikaner & Jaipur wherein the Hon’ble High Court after extensively examining the matter and considering the various
ITA No. 296-Chd-2021 permissible only if the statutory liability of payment of PF or other contribution referred to in Clause (b) are paid within the due date under the respective enactments by the assessees and not under the due date of filing of return.
We have already observed that till this provision was brought in as the due amounts on one pretext or the other were not being deposited by the assessees though substantial benefits had been obtained by them in the shape of the amount having been claimed as a deduction but the said amounts were not deposited. It is pertinent to note that the respective Act such as PF etc. also provides that the amounts can be paid later on subject to payment of interest and other consequences and to get benefit under the Income Tax Act, an assessee ought to have actually deposited the entire amount as also to adduce evidence regarding such deposit on or before the return of income under sub-section (1) of Section 139 of the IT Act.
Thus, we are of the view that where the PF and/or EPF, CPF, GPF etc., if paid after the due date under respective Act but before filing of the return of income under Section 139(1), cannot be disallowed under Section 43B or under Section 36(1)(va) of the IT Act.”
The said decision has subsequently been followed in CIT vs. Jaipur Vidyut Vitran Nigam Ltd. (supra), CIT vs.
We further note that though the ld. CIT(A) has not disputed the various decisions of Hon’ble Rajasthan High Court but has decided to follow the decisions rendered by the Hon’ble Delhi, Madras, Gujarat and Kerala High Courts. Given the divergent views taken by the various High Courts and in the instant case, the fact that the juri iction over the Assessing officer lies with the Hon’ble Rajasthan High Court,
ITA No. 296-Chd-2021 In the result, the appeal of the assesse is allowed.
Order pronounced in the Open Court on 07.12.2021. ( N. K. SAINI) Judicial Member Dated : 07.12.2021 “आर.के.” आदेशक"""त"ल"पअ"े"षत/ Copy of the order forwarded to : 1. अपीलाथ"/ The Appellant
""यथ"/ The Respondent 3. आयकरआयु"त/ CIT 4. आयकरआयु"त (अपील)/ The CIT(A)
"वभागीय""त"न"ध, आयकरअपील!यआ"धकरण, च$डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड'फाईल/ Guard File
आदेशानुसार/ By order, सहायकपंजीकार/
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