PRINCIPLE ACS ENGINEERING INDIA PRIVATE LIMITED,HYDERABAD vs. DY. COMMISSIONER OF INCOME TAX, CIRCLE-10(1), HYDERABAD

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ITA 43/HYD/2020Status: DisposedITAT Hyderabad08 October 2021AY 2017-183 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. This was based on the legislative amendment and CBDT clarification that the provisions regarding disallowance of employee's contribution to ESI/PF were applicable prospectively from April 1, 2021.

What were the facts?

The assessee's appeal for AY 2017-18 concerned a disallowance of Rs. 8,82,048/- related to ESI/PF contributions. The assessee argued the payment was made before the due date for filing the return, while the Revenue contended it was after the statutory due date.

What were the issues?

Whether ESI/PF contributions paid after the statutory due date but before the due date of filing the return are disallowable for the assessment year prior to the prospective amendment.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCHES “B” : HYDERABAD

Before: SHRI S.S.GODARA & SHRI LAXMI PRASAD SAHU

PER S.S.GODARA, J.M. : This assessee’s appeal for AY.2017-18 arises from the CIT(A)-6, Hyderabad’s order dated 15-11-2019 passed in case No.10002 / 2019-20 / C / CIT(A)-6, involving proceedings u/s. 143(1) of the Income Tax Act, 1961 [in short, ‘the Act’]. Heard both the parties. Case file perused.

2.

Coming to the sole substantive issue raised herein of ESI/PF disallowance of Rs.8,82,048/- made in both the lower proceedings the assessee’s and Revenue’s pleas before us are that the same has been paid before the due date of filing Sec.139(1) return and after the due date prescribed in the corresponding statute(s); 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 8th October, 2021

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