KIRAN KOMMERCIAL WATCHES,SECUNDERABAD vs. DEPUTY COMMISSIONER OF INCOME TAX,CIRCLE-10(1), HYDERABAD

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ITA 468/HYD/2021Status: DisposedITAT Hyderabad03 December 2021AY 2018-192 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the disallowance was not sustainable because the legislative amendments to Sections 36(1)(va) and 43B, along with the CBDT's clarification, applied prospectively from April 1, 2021. The disallowance was therefore deleted.

What were the facts?

The assessee's appeal for AY 2018-19 concerned an ESI/PF disallowance of Rs. 1,14,262. The assessee claimed the payment was made before the due date of filing the return, while the Revenue argued it was after the statutory due dates.

What were the issues?

The key issue was whether the disallowance of ESI/PF contributions paid after the statutory due dates but before the return filing due date was valid, considering recent legislative changes and clarifications.

Which sections of the Income-tax Act were involved?

Section 36(1)(va),Section 43B,Section 139(1),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCHES “SMC”, HYDERABAD

Before: SHRI S.S.GODARA

For Respondent: Shri Venkata Tejomurthy
Hearing: 06.12.2021Pronounced: 07.12.2021

Assessment Year: 2018-19 Kiran Kommercial Vs. DCIT, CPC, Watches, Secunderabad, Bangalore. Telangana. PAN : AADFK0204B. (Appellant) (Respondent) Assessee by: None. Revenue by: Shri Venkata Tejomurthy. Date of hearing: 06.12.2021 Date of pronouncement: 07.12.2021 ORDER PER S.S. GODARA : This assessee’s appeal for AY.2018-19 arises from the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi’s order dated 21.09.2021 in case No.ITBA/ NFAC/S/250/2021-22/1035759350(1) involving proceedings under section 250 of Income Tax Act, 1961 (in short, “the Act”).

2.

Coming to the sole substantive issue of ESI/PF disallowance of Rs.1,14,262/- made in both the lower proceedings, the assessee’s and Revenue’s plea(s) before me are that the same had been paid before the due date of filing Sec.139(1) return and after the due date prescribed in the corresponding statutes; respectively. I notice in this factual backdrop that the legislature has not only incorporated necessary amendment in Sections 36(1)(va) as well as u/s. 43B vide Finance Act, 2021 to this effect but also the CBDT has issued Memorandum of Explanation that the same applies w.e.f. 01-04-2021 only. It is further not an issue that the foregoing legislative amendments have proposed employers’ contribution/ disallowance u/s.43B as against employee’s contribution u/s.36(va) of the Act; respectively. However, keeping in mind the fact that the same has been clarified to be applicable only with prospective effect from 01-04-2021 only, I hold that the impugned disallowance is not sustainable in view of all these latest developments. The impugned ESI/PF disallowance is deleted therefore.

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