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Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR
Before: SHRI N. K. SAINI & SHRI N. K. CHOUDHRY
आदेश / O R D E R Per N. K. Choudhry, JM
The assessee has preferred these appeals against the separate orders dated 22.06.2021, impugned herein, passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi, for the assessment years 2018-2019 & 2019-2020, u/s. 250
2 ITA Nos.95&96/Jodh/2021 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). 2. The issue involved in the instant appeals relates to the deposit of employees’ contributions qua ESI & PF after the due date as prescribed in the relevant Acts, however, before the due date of filing of return of income u/s.139(1) of the Act, resulting into making disallowances of Rs.3,00,293/- for A.Y.2018-2019 and Rs.3,51,233/- for A.Y.2019-2020.
Against the above order of AO, the assessee preferred first appeals before the CIT(A), however, the CIT(A) sustained the additions made by the AO for the respective assessment years under consideration while dismissing both the appeals of the assessee.
Further feeling aggrieved, the assessee is in appeals before us.
Having heard the parties and perused the material available on record. The assessee raised the arguments against the impugned orders, whereas the Ld. DR vehemently supported the same.
At the outset, it is observed that there is a delay of 73 days in filing both the appeals. In this regard, the assessee
3 ITA Nos.95&96/Jodh/2021 has filed condonation applications along with affidavits in both the appeals, which are placed in the record, wherein it is submitted by the assessee that due to some inevitable circumstances, both the appeals could not file within the time. Ld. AR of the assessee also drew our attention to the judgment of the Hon’ble Supreme Court in the case of Collector Land acquisition Vs. Mst. Katiji [167 ITR 467 (SC)] and submitted that the delay in filing the instant appeals is not malafide and the same may kindly be condoned. Ld. DR did not object to the above contentions of ld. AR of the assessee.
6.1 We have considered the submissions of the parties qua limitation period. We may observe that the Hon’ble Apex Court vide its order dated 23.09.2021 has held that where the period of limitation for any appeal has expired during the period between 15th March, 2020 till 2nd October, 2021, notwithstanding actual balance period of limitation remaining, all persons shall have a limitation period of 90 days from 3rd October, 2021. Hence, we are of the considered opinion that the delay, if any, in these appeals, deserves to be condoned as per the direction given by the Hon’ble Apex Court.
4 ITA Nos.95&96/Jodh/2021 Accordingly, the delay is condoned and both the appeals are admitted. 7. Coming to the merits of the case, we may observe that the issue involved in the present appeal is squarely covered by the decision of coordinate bench of the Tribunal in ITA Nos.71 & 72/Jodh/2021, decided on 28/09/21, wherein the Tribunal has deleted the disallowance made by the AO on account of delay in depositing the employees’ contribution towards ESI & PF as the same were deposited prior to the amendment made in Sec.36(1)(va) and Sec.43(B)(b) by the Finance Act, 2021 which is applicable w.e.f. 01.04.2021. The concluding part of the Tribunal’s order is as under: - 10. On an identical issue, this Bench of the Tribunal vide order dated 12.8.2021 in the case of Mohangarh Engineers and Construction Company, Jodhpur & Others vs CPC, Banglore in ITA No. 5/Jodh/2021 and others held vide para 13 to 18 as under:- “13. We have heard the rival contentions and perused the material available on record. On perusal of the details submitted by the assessee as part of its return of income, it is noted that the assessee has deposited the employees’s contribution towards ESI and PF well before the due date of filing of return of income u/s 139(1) and the last of such deposits were made on 16.04.2019 whereas due date of filing the return for the impugned assessment year 2019-20 was 31.10.2019 and the return of income was also filed on the said date. Admittedly and undisputedly, the employees’s contribution to ESI and PF which have been collected by the assessee from its employees have thus been deposited well before the due date of filing of return of income u/s 139(1) of the Act. 14. The issue is no more res integra in light of series of decisions rendered by the Hon’ble Rajasthan High Court starting from CIT vs. State Bank of Bikaner & Jaipur (supra) and subsequent decisions.
5 ITA Nos.95&96/Jodh/2021 15. In this regard, we may refer to the initial decision of Hon’ble Rajasthan High Court in case of CIT vs. State Bank of Bikaner & Jaipur wherein the Hon’ble High Court after extensively examining the matter and considering the various decisions of the Hon’ble Supreme Court and various other High Courts has decided the matter in favour of the assessee. In the said decision, the Hon’ble High Court was pleased to held as under:
“20. On perusal of Sec.36(1)(va) and Sec.43(B)(b) and analyzing the judgments rendered, in our view as well, it is clear that the legislature brought in the statute Section 43(B)(b) to curb the activities of such tax payers who did not discharge their statutory liability of payment of dues, as aforesaid; and rightly so as on the one hand claim was being made under Section 36 for allowing the deduction of GPF, CPF, ESI etc. as per the system followed by the assessees in claiming the deduction i.e. accrual basis and the same was being allowed, as the liability did exist but the said amount though claimed as a deduction was not being deposited even after lapse of several years. Therefore, to put a check on the said claims/deductions having been made, the said provision was brought in to curb the said activities and which was approved by the Hon'ble Apex Court in the case of Allied Motors (P) Ltd. (supra).
A conjoint reading of the proviso to Section 43-B which was inserted by the Finance Act, 1987 made effective from 01/04/1988, the words numbered as clause (a), (c), (d), (e) and (f), are omitted from the above proviso and, further more second proviso was removed by Finance Act, 2003 therefore, the deduction towards the employer's contribution, if paid, prior to due date of filing of return can be claimed by the assessee. In our view, the explanation appended to Section 36(1)(va) of the Act further envisage that the amount actually paid by the assessee on or before the due date admissible at the time of submitting return of the income under Section 139 of the Act in respect of the previous year can be claimed by the assessee for deduction out of their gross total income. It is also clear that Sec.43B starts with a notwithstanding clause & would thus override Sec.36(1) (va) and if read in isolation Sec. 43B would become obsolete. Accordingly, contention of counsel for the revenue is not tenable for the reason aforesaid that deductions out of the gross income for payment of tax at the time of submission of return under Section 139 is permissible only if the statutory liability of payment of PF or other contribution referred to in Clause (b) are paid within the due date under the respective enactments by the assessees and not under the due date of filing of return.
6 ITA Nos.95&96/Jodh/2021 22. We have already observed that till this provision was brought in as the due amounts on one pretext or the other were not being deposited by the assessees though substantial benefits had been obtained by them in the shape of the amount having been claimed as a deduction but the said amounts were not deposited. It is pertinent to note that the respective Act such as PF etc. also provides that the amounts can be paid later on subject to payment of interest and other consequences and to get benefit under the Income Tax Act, an assessee ought to have actually deposited the entire amount as also to adduce evidence regarding such deposit on or before the return of income under sub-section (1) of Section 139 of the IT Act.
Thus, we are of the view that where the PF and/or EPF, CPF, GPF etc., if paid after the due date under respective Act but before filing of the return of income under Section 139(1), cannot be disallowed under Section 43B or under Section 36(1)(va) of the IT Act.”
The said decision has subsequently been followed in CIT vs. Jaipur VidyutVitran Nigam Ltd. (supra), CIT vs. Udaipur DugdhUtpadakSahakariSangh Ltd. (supra), and CIT vs Rajasthan State Beverages Corportation Limited (supra). In all these decisions, it has been consistently held that where the PF and ESI dues are paid after the due date under the respective statues but before filing of the return of income under section 139(1), the same cannot be disallowed under section 43B read with section 36(1)(va) of the Act.
We further note that though the ld. CIT(A) has not disputed the various decisions of Hon’ble Rajasthan High Court but has decided to follow the decisions rendered by the Hon’ble Delhi, Madras, Gujarat and Kerala High Courts. Given the divergent views taken by the various High Courts and in the instant case, the fact that the jurisdiction over the Assessing officer lies with the Hon’ble Rajasthan High Court, in our considered view, the ld CIT(A) ought to have considered and followed the decision of the jurisdictional Rajasthan High Court, as evident from series of decisions referred supra, as the same is binding on all the appellate authorities as well as the Assessing officer under its jurisdiction in the State of Rajasthan. 18. In light of aforesaid discussion and in the entirety of facts and circumstances of the case, the addition by way of adjustment while processing the return of income u/s 143(1) amounting to Rs 4,38,530/- so made by the CPC towards the delayed deposit of the employees’s contribution towards ESI and PF though paid well before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted as the same cannot be disallowed under section 43B read with section 36(1)(va) of the Act in
7 ITA Nos.95&96/Jodh/2021 view of the binding decisions of the Hon’ble Rajasthan High Court. “ 11. Since the facts of the present cases are identical to the facts involved in the aforesaid referred to cases, therefore respectfully following the earlier orders as referred to herein above of the different Benches of the ITAT, the impugned additions made by the Assessing Officer and sustained by the Ld. CIT(A) on account of deposits of employees contribution of ESI & PF prior to filing of the return of income u/s 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. 12. In the result, both the appeals of the assessees are allowed.” 6. Since the facts involved in the instant appeals are identical to the facts involved in the above case, therefore, respectfully following the aforesaid order of the Coordinate Bench of the Tribunal, the disallowances of Rs.3,00,293/- for A.Y.2018-2019 and Rs.3,51,233/- for A.Y.2019-2020 qua employees’ contribution towards PF and ESI, sustained by the Ld. CIT(A) stands deleted. 7. In the result, the appeals of the assessee are allowed. Order pronounced in the open court on 10/11/ 2021. Sd/- Sd/- (एन. के. सैनी) (एन.के.चौिरी) (N. K. SAINI) (N.K.CHOUDHRY) उपाध्यक्ष / VICE PRESIDENT न्याययक सदस्य / JUDICIAL MEMBER ददनाांक Dated 10/11/2021 Prakash Kumar Mishra, Sr.PS(on tour) आदेश की प्रयिलऱपप अग्रेपषि/Copy of the Order forwarded to : अऩीऱाथी / The Appellant- 1. M/s Progressive and Popular Minerals Private Limited, Khwaja Bagh, Sawa, Chittorgarh-312613 प्रत्यथी / The Respondent- 2. DCIT-CPC, Bengaluru आयकर आयुक्त(अऩीऱ) / The CIT(A), 3. आयकर आयुक्त / CIT 4. ववभागीय प्रनतननधध, आयकर अऩीऱीय अधधकरण, जोधऩुर / DR, ITAT, 5.
8 ITA Nos.95&96/Jodh/2021 Jodhpur गार्ा पाईऱ / Guard file. 6. सत्यावऩत प्रनत //True Copy// आदेशानुसार/ BY ORDER,
(Assistant Registrar) आयकर अपीऱीय अधिकरण, जोधऩुर / Income Tax Appellate Tribunal, Jodhpur