SOCTRONICS TECHNOLOGIES PRIVATE LIMITED,HYDERABAD vs. DY. COMMISSIONER OF INCOME TAX, CIRCLE-3(2), HYDERABAD

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ITA 485/HYD/2020Status: DisposedITAT Hyderabad23 September 2021AY 2017-182 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 legislative amendments to Sections 36(1)(va) and 43B via the Finance Act, 2021, and a CBDT clarification that these amendments apply prospectively from 01-04-2021.

What were the facts?

The assessee's appeal concerns an ESI/PF disallowance of Rs. 1,49,26,447/- for AY 2017-18. The assessee claimed the payments were made before the due date of filing the return under Section 139(1), while the revenue argued they were paid 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 due date for filing the return under Section 139(1) was valid, considering subsequent legislative changes.

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 ‘ B ‘ Bench, Hyderabad

Before: Shri S.S. Godara & Shri Inturi Rama Rao

For Appellant: Shri A.V. Raghuram – AR
For Respondent: Shri A. Venkata Rao – DR
Hearing: 21/09/2021Pronounced: 23/09/2021

This assessee’s appeal for AY.2017-18 arises from the CIT(A)-3, Hyderabad’s order dated 22.06.2020 passed in case No.10801/2019-20/A3/ CIT(A)-3, involving proceedings u/s. 143(3) of the Income Tax Act, 1961 [in short, ‘the Act’].

2.

Coming to the sole substantive issue of ESI/PF disallowance of Rs.1,49,26,447/- 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 Page 1 of 2 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.

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