SRI BHAVANI JEWELS & GEMS(INDIA) PRIVATE LIMITED,HYDERABAD vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-3(2), HYDERABAD

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ITA 737/HYD/2020Status: DisposedITAT Hyderabad28 October 2021AY 2019-203 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 in light of the legislative amendments and CBDT clarification that these provisions apply prospectively from April 1, 2021. The disallowances were therefore deleted.

What were the facts?

The assessee challenged disallowances made under Section 36(va) read with Section 43B of the Income Tax Act for employee's contribution to PF/ESI. The disallowances were made for amounts paid after the due date of filing the return but before the statutory due date.

What were the issues?

Whether disallowance of employee's contribution to PF/ESI paid after the statutory due date but before the return filing due date is permissible, considering subsequent legislative amendments and clarifications.

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

O R D E R PER S.S.GODARA, J.M. : These two assessee’s appeals for AYs.2018-19 & 2019-20 arise from the CIT(A)-3, Hyderabad’s order(s) dated 21-09- 2020 passed in case Nos.10005 & 10039 / 2020-21 / C / CIT(A)-3, involving proceedings u/s.143(1) & u/s.154 of the Income Tax Act, 1961 [in short, ‘the Act’]; respectively. Heard both the parties. Case files perused.

2.

It transpires at the outset that both the assessee’s appeals suffer from delay of three days, stated to be attributable to the reason(s) beyond its control as per condonation petition/affidavit. No rebuttal has come from the departmental side. The impugned delay is condoned therefore.

:- 2 -: & 737/Hyd/2020

3.

The assessee’s identical sole substantive ground in both of these appeals challenges correctness of the lower authorities’ action making disallowance of Rs.2,17,255/- and Rs.1,77,800/-, assessment year-wise; respectively u/s.36(va) r.w.s.43B of the Act. 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 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. This identical disallowance stands deleted accordingly. No other ground has been pressed before us.

4.

These assessee’s twin appeals are allowed in above terms. A copy of this common order be placed in the respective case files. Order pronounced in the open court on 28th October, 2021 Sd/- Sd/- (LAXMI PRASAD SAHU) (S.S.GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Dated: 28-10-2021 TNMM

:- 3 -: & 737/Hyd/2020

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