SARVODAYA ENTERPRISES,NEW DELHI vs. ADDI. DIT CPC, BANGALORE

ORDER

PER ANIL CHATURVEDI, AM:

1. “That on proper interpretation of the provisions of law it may be held that the CIT (A) was wrong to confirm the addition of Rs.3,07,637/- by CPC pertaining to late deposit of employees share of ESI & PF but paid before the due date of filing of return. That it may be held that as it was a legal issue and not a mistake apparent from record or permissible addition u/s 143(1), the addition being wrongly made in intimation u/s 143(1), be deleted. 2. a) That in the facts and circumstances of the case and in law the ld CIT(A) has erred in confirming the addition of Rs.3,07,637/- by the CPC in respect of employees share of ESI and Provident Fund deposited late but paid before the due date of filing the return. That the addition being contrary to provisions of law and unwarranted and unjustified be deleted. 3. b) That on a proper interpretation of provisions of sec

2. (24)(x) read with section 43B, it may be held that as the payments have been made before the due date of filing of return, the addition is bad in law and be deleted.”

4. Before us, at the outset, Learned AR submitted that the sole 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).

3 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. He submitted that though there has been delay in deposit of PF/ESIC Contributions but all the contributions received by the assessee from its employees have been deposited with the appropriate authorities before the filing of return of income by the assessee. 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 in the case of Azamgarh Steel & Power vs. CPC in dated 31.05.2021 and CIT vs. AIMIL Ltd. [2010] 188 Taxman 265 (Delhi) and various other decisions.

4 7. 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.”

5 9. 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 appeal filed by the assessee.