DEPUTY COMMISSIONER OF INCOME TAX,CIRCLE-1(2), HYDERABAD vs. CHAK RADER FARM EQUIPMENTS PRIVATE LIMITED, HYDERABAD

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ITA 374/HYD/2021Status: DisposedITAT Hyderabad25 November 2021AY 2019-20202 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the disallowance was not sustainable. This was based on the legislative amendment to Sections 36(1)(va) and 43B via the Finance Act, 2021, and the CBDT's clarification that these amendments apply prospectively from 01-04-2021.

What were the facts?

The assessee's appeal for AY 2019-20 concerned a disallowance of Rs. 3,70,758/- related to ESI/PF contributions. The assessee claimed the payments were made before the due date of filing the Section 139(1) return, while the revenue argued they were made after the statutory due dates.

What were the issues?

The key issue was whether ESI/PF contributions paid after the statutory due dates but before the due date for filing the income tax return were disallowable for the assessment year 2019-20, considering recent legislative changes.

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 ‘ B ‘ Bench, Hyderabad

Before: Shri S.S. Godara & Shri Laxmi Prasad Sahu

For Appellant: Shri Kiran Manohar
For Respondent: Smt. Matta Padma
Hearing: 08.12.2021Pronounced: 09.12.2021

Assessment Year: 2019-20 Chak Rader Farm Vs. DCIT, Circle 1(2), Equipments Private Hyderabad. Limited, Hyderabad. PAN : AABCC5121G. (Appellant) (Respondent) Assessee by: Shri Kiran Manohar. Revenue by: Smt. Matta Padma. Date of hearing: 08.12.2021 Date of pronouncement: 09.12.2021 O R D E R PER S.S. GODARA : This assessee’s appeal for A.Y.2019-20 arises from the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi’s order dated 05.08.2021 in case No.ITBA/ NFAC/S/250/2021-22/1034648788(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.3,70,758/- made in both the lower proceedings, the assessee’s and Revenue’s plea(s) before us 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. We 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, we hold that the impugned disallowance is not sustainable in view of all these latest developments. The impugned ESI/PF disallowance is deleted therefore.

3.

This assessee’s appeal is allowed in above terms.

Order pronounced in the Open Court on 9th December, 2021.

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