SANZYME PRIVATE LIMITED,HYDERABAD vs. DY. COMMISSIONER OF INCOME TAX, CIRCLE-3(1), HYDERABAD

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ITA 542/HYD/2020Status: DisposedITAT Hyderabad27 August 2021AY 2018-193 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 impugned disallowance is not sustainable, considering the legislative amendments and CBDT clarification that they apply prospectively from 1.4.2021. Therefore, the disallowance of the EPF remittance is directed to be deleted.

What were the facts?

The assessee made a late remittance of employees' contribution towards EPF for April 2017, paying it on May 16, 2017, instead of the due date of May 15, 2017. The CIT(A) confirmed the addition of Rs. 13,02,819/- as income on account of this late remittance.

What were the issues?

Whether the late remittance of employees' contribution to EPF, even if paid before the due date of filing the income tax return, is disallowable as a deduction. The applicability of recent legislative amendments and CBDT clarifications to the assessment year in question.

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 ‘B’ BENCH : Hyderabad

Before: Shri S.S. GODARA & Shri L.P. SAHU

Hearing: 12/07/2021Pronounced: 27/08/2021

Date of Hearing : 12/07/2021 Date of Pronouncement : 27/08/2021 O R D E R PER S.S. GODARA, J.M.

This assessee’s appeal for A.Y. 2018-19 arises against the Commissioner of Income Tax (Appeals) “[CIT(A)]”-3, Hyderabad’s order dated 13.08.2020 passed in case no. 10465/2019-20 in proceedings u/s 143(1) of the Income Tax Act, 1961 [in short ‘the Act’].

Heard both the parties. Case file perused. Assessee has raised the following grounds in its appeal.

1. The Order of the Commissioner of Income Tax (Appeals)-3, Hyderabad dated 13-08-2020 to the extent of confirming addition of Rs. 13,02,819/- as income on account of late remittance of employees' contribution towards EPF is erroneous, contrary to law and facts of the case.

ITA 542/Hyd/2020 AY: 2018-19 M/s Sanzyme Pvt. Ltd.

2.

a) Commissioner of Income Tax (Appeals) is not justified in confirming the addition of Rs.13,02,819/- as income on account of employee's contribution to PF u/s.36(1)(va) for the month of April 2017 which was paid on 16-05-2017 against the due date of 15-05-2017, on the ground that such payment was made beyond due date under the Provident Fund Act. b) Commissioner of Income Tax (Appeals) in this regard ought to have seen that various judicial forums held that though payments were made on account of PF beyond due date under Provident Fund Act but were made before due date for filing of Income tax return for the relevant asst. year are allowable as deduction. Hence the Commissioner of Income Tax (Appeals) should not have confirmed the addition to the extent of Rs.13,02,819/- as income.

3.

For all of the above and such other grounds as may be urged at the time of hearing it is most respectfully prayed that the Hon'ble Tribunal be pleased to direct the Assessing Officer to delete addition of Rs.13,02,819/- as income made towards employee's share of PF u/s.36(1)(va) for the month of April 2017 in the interest of justice.

2. Coming to the sole substantive issue of EPF disallowance of Rs. 13,02,819/-, the assessee’s and Revenue’s plea that the same has been paid before the due date of filing return of income 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(va) as well as 43B vide Finance Act, 2021 to this effect but also the CBDT has issued Memorandum of Explanation that the same applies w.e.f. 1.4.2021 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 1.4.2021, we hold that the impugned disallowance is not sustainable in view of all these latest developments even if the Revenue’s case is supported by various case laws.

2.1. The impugned EPF disallowance is directed to be deleted therefore.

ITA 542/Hyd/2020 AY: 2018-19 M/s Sanzyme Pvt. Ltd. This assessee’s appeal is allowed in above terms. Order pronounced in Open Court on 27/08/2021.

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