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Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’, NEW DELHI BEFORE SH. ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SH. CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER (Assessment Year : 2018-19) Magsons Exports Vs. DCIT D-41, Okhla Industrial CPC Area, Phase – 1, Bengluru New Delhi – 110 020 PAN : AABFM 1226 D (APPELLANT) (RESPONDENT) Assessee by Shri Bal Kishan Chhabra, C.A. Revenue by Shri Jeetendra Chand, Sr. D.R. Date of hearing: 30.08.2022 Date of Pronouncement: 30.08.2022 ORDER PER ANIL CHATURVEDI, AM:
This appeal filed by the assessee is directed against the order dated 30.03.2021 of the Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi relating to Assessment Year 2018-19.
The relevant facts as culled from the material on records are as under :
Assessee is a company which is filed its return of income for A.Y. 2018-19 on 12.10.2018 declaring the total income of Rs. 1,47,98,670/-. CPC Bangalore vide DIN No. CPC/1819/A5/1919072128 dated 16.10.2019 issued u/s 143(1) of the Act determined the total income at Rs.1,81,54,770/- after making disallowance of Rs.33,56,093/- u/s 36(1)(va) of the Act on account of non-deposit of the employees’ contribution towards PF/ESIC before the prescribed due dates. Aggrieved by the order of AO, assessee carried the matter before the CIT(A). CIT(A)- NFAC, Delhi vide order dated 30.03.2021 in DIN & Order No. ITBA/NFAC/S/250/2020-21/1031941229(1) dismissed the appeal of the assessee. Aggrieved by the order of CIT, NFAC, assessee is now in appeal and has raised the following grounds:
1. The Learned CIT(A) and the AO have erred in assessing the income from business at Rs.1,81,54,767/- as against Rs.1,47,98,674/- by disallowing the expenses of Rs.33,56,093/- appears to be made on the ground of late deposit of PF and ESIC etc. which is illegal as per the decision of the Delhi High Court decision in the case of AIMIL LIMITED reported in 321 ITR 508 (Del) since the same was deposited before the due date of filing the return of income for the relevant previous year; 2. Appellant craves to add, file, modify, any other ground before or at the time of hearing of appeal.
4. Before us, at the outset, Learned AR submitted that the grievance of the assessee is the additions on account of delay in deposit of employee’s contribution towards provident fund and ESI fund made by AO and upheld by CIT(A).
5. Before us, Learned AR submitted that additions has been made in the intimation issued by CPC, Bangalore u/s 36(1)(va) of the Act for the reason that the contribution received towards PF/ESIC by the assessee from its employees was not deposited before the due date. Learned AR also pointed to the chart of payment at Annexure-A and from that table he pointed out that though there has been slight delay in deposit of the employee’s contribution of PF/ESIC but the fact remains that the entire contributions received by the assessee have been deposited with the appropriate authorities by the assessee before the filing of return of income. He therefore submitted that since the amounts have been deposited before the filing of return of income, no disallowance is called for and for aforesaid proposition, he relied on the decision of Delhi High Court in the case of CIT vs. AIMIL Ltd. reported in 321 ITR 508 (Del).
Learned DR on the other hand supported the order of lower authorities and also placed reliance on the decision of Delhi Tribunal in the case of Vedvan Consultants Pvt. Ltd. vs DCIT in order dated 26.08.2021. He also submitted that the amendment brought out by Finance Act 2021 would be applicable to the present case as by the amendment it has been clarified that provisions of Section 43B of the Act shall not apply and shall be deemed never to have been applied to a sum received by the assessee from any of his employees to which the provisions of sub clause (x) of Clause (24) of Section 2 applies.
We have heard the rival submissions and perused the material available on record. The issue is no more res-integra. The issue has already been settled in favour of the assessee by various judicial pronouncements by the Tribunal. The Hon’ble Jurisdictional High Court of Delhi in the case of PCIT vs. Pro Interactive Service (India) Pvt. Ltd. dated 10.09.2018 has already taken a view in favour of the assessee by holding as under: “In view of the judgement of the Division Bench of Delhi High Court in Commissioner of Income Tax versus AIMIL Limited, (2010) 321 ITR 508 (Del.) the issue is covered against the Revenue and, therefore, no substantial question of law arises for consideration in this appeal. The legislative intent was/is to ensure that the amount paid is allowed as an expenditure only when payment is actually made. We do not think that the legislative intent and objective is to treat belated payment of Employee’s Provident Fund (EPD) and Employee’s State Insurance Scheme (ESI) as deemed income of the employer under section 2(23)(x) of the Act.”
As far as reliance by Learned DR on the amendment brought out by Finance Act 2021 is concerned, “notes on clauses” to the Finance Bill 2021 clearly states that the amendment will take effect from 1st April 2021 and will apply in relation to the assessment year 2021-22 and subsequent assessment year. In such a situation, we are of the view that the amendment brought out by Finance Act 2021 does not apply to the assessment year under consideration.
Before us, Revenue has not placed any material on record to demonstrate that the aforesaid order cited hereinabove has been overruled/stayed/set aside by higher judicial forum. In view of the aforesaid facts, we are of the view that the AO was not justified in denying the deduction claimed by the assessee on account of late deposit of PF/ESI/EPF, albeit before filing the return of income. Admittedly in the matter, the Revenue had not contended that the assessee has deposited the contribution after the filing of the return of income. In view of the above, respectfully following the decision of the Hon’ble High Court cited hereinabove, we allow the ground raised by the assessee and direct the AO to delete the addition.
In the result, appeal filed by the assessee is allowed.
Order pronounced in the open court on 30.08.2022