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Income Tax Appellate Tribunal, HYDERABAD ‘B’ BENCH : Hyderabad
Before: Shri S.S. GODARA & Shri L.P. SAHU
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.
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.
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.