PLACEBO GEARS AND TRANSMISSIONS,HYDERABAD vs. INCOME TAX OFFICERS,WARD-11(5), HYDERABAD

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ITA 427/HYD/2021Status: DisposedITAT Hyderabad25 November 2021AY 2018-193 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the disallowances were not sustainable. Amendments to Sections 36(1)(va) and 43B, along with CBDT's clarification, indicated prospective application from 01-04-2021, making the impugned disallowances invalid for the assessment years in question.

What were the facts?

The assessee claimed deductions for ESI/PF contributions. The lower authorities disallowed these amounts as they were paid after the due date prescribed by the respective statutes, but before the due date for filing the income tax return.

What were the issues?

Whether ESI/PF contributions paid after the statutory due date but before the income tax return filing due date are disallowable, considering recent legislative amendments and clarifications.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad

Before: Shri A. Mohan Alankamony & Shri S.S. Godara

Hearing: 08/12/2021Pronounced: 09/12/2021

O R D E R Per S. S. Godara, J.M. These assessee’s appeals for AYs. 2018-19 and 2019-20 arises from the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi’s orders both dated 31.08.2021 in case Nos. ITBA/NFAC/S/250/2021-22/1035187384(1) and ITBA/NFAC/S/250/2021-22/1035187408(1) involving proceedings under section 250 of Income Tax Act, 1961 (in short, “the Act”).

Heard both the parties. Case files perused.

2.

Coming to the sole substantive issue of ESI/PF disallowance(s) of Rs.10,43,859/- and Rs.7,68,501/- made in both the lower proceedings, the assessee’s and Revenue’s plea 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(s) are not sustainable in view of all these latest developments. The impugned ESI/PF disallowance(s) are deleted therefore.

3.

These assessee’s appeals are allowed in above terms.

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

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