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Income Tax Appellate Tribunal, DELHI “C” BENCH: NEW DELHI
Before: SHRI KUL BHARAT & SHRI PRADIP KUMAR KEDIA
ORDER
PER KUL BHARAT, JM :
This appeal filed by the assessee for the assessment year 2018-19 is directed against the order of Ld. CIT(A)-10, New Delhi dated 07.09.2020.
The assessee has raised following grounds of appeal:-
1. “That On the facts and in circumstances of the case, the Intimation u/s 143(1) dated 22.08.2019, CPC/1819/A5/1919218143 for AY 2018-19 disallowing the deduction u/s 36(1)(va) of the I.T. Act, 1961 is illegal, void and without jurisdiction.
2. That the Id. CIT(A) was not justified in upholding the disallowance of deduction u/s 36(l)(va) u/s 143(1) and Id. CIT(A) also failed to consider that the issue of deduction u/s 36(1)(va) is clearly a debatable one and beyond the authority conferred to CPC by Section 143(l)(a) and could only be decided in the detailed assessment and not by way of intimation u/s 143(1). 3. That the Id. CIT(A) erred in law and on facts in failing to appreciate the settled principle that when a debatable question arises and when the issue is contentious, prima facie adjustment u/s 143(1) of the Act is not permissible.
4. On the facts and circumstances of the case and in law, LD. CIT (Appeals) has erred in confirming the action of DCIT (CPC) in determining appellant total income Rs.7296425/- as against Income of Rs.6839031/- as declared in ITR by the appellant.
5. Without prejudice to the above grounds, Ld. CIT(A) has erred in law by confirming DCIT (CPC)’s act of adding sum Rs. 4,57,394/- being employees contribution to PF/ESI by denying the deduction u/s 36(1)(va) of the Income Tax Act, 1961 to the appellant.
6. On the facts and circumstances of the case the Ld. CIT(A) has erred in law by confirming the disallowance of Employees contribution towards EPF and ESI despite of the fact that same has been paid by appellant before due date of filling of return of Income whereas It has been decided and held by Honorable Apex Court and various High Courts that employee contribution is allowed even if paid after due date of filling of return of income 7. The order of the CIT(A) is not sustainable In law in as-much-as the order has been passed without affording adequate opportunity of being heard to the Assessing Officer as required u/s 250(1 )(b) of the Income Tax Act, 1961.
8. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal
at the time of hearing and all the above grounds are without prejudice to each other.” FACTS OF THE CASE
3. Facts giving rise to the present appeal are that the assessee was a limited liability partnership firm engaged in manufacturing and exports of fashion garments and accessories, filed return of income on 29.10.2018 and subsequently, revised the return of income of 18.03.2019 declaring taxable income of Rs.68,39,031/- and paid tax amounting to Rs.21,90,993/- and the 2 | P a g e same was processed u/s 143(1) of the Income Tax Act, 1961 (“the Act”) on 23.05.2019 by disallowing Rs.4,57,393/- on account of payment of employees contribution to ESI & PF by the Central Processing Centre (“CPC”), Bangalore on the basis that the same was deposited after due dates, as per the respective Acts.
4. Aggrieved against this, the assessee preferred appeal before Ld.CIT(A), who confirmed the addition.
Now, the assessee is in appeal before this Tribunal.
Ld. Sr. DR vehemently submitted that law is clear in this respect and he relied upon the decision of Ld.CIT(A).
At the outset, Ld. Counsel for the assessee submitted that issue is squarely covered in favour of the assessee. He relied on various case laws.
We have heard the contentions of Ld. authorized representatives of the parties and perused the material available on record and gone through the orders of the authorities below. The issue in this appeal is related to disallowance of expenditure on account of delay in deposit of employees contribution related to ESI & PF. The issue is squarely covered by the judgement of Hon’ble Jurisdictional High Court of Delhi in the case of PCIT vs Pro Interactive Service (India) Pvt.Ltd. in [Del.] order dated 10.09.2018 held 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. 3 | P a g e
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.” Therefore, respectfully following the ratio laid down by the Hon’ble Jurisdictional High Court in the above-mentioned binding precedent, we hereby direct the Assessing Officer to delete the disallowance. Thus, grounds raised by the assessee are allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on 27th July, 2022.