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Income Tax Appellate Tribunal, DELHI BENCH “H”: NEW DELHI
Before: SHRI ANIL CHATURVEDI & SHRI N. K. CHOUDHRY
The Assessee has preferred the instant appeal against the order dated 25-08-2020impugned herein passed by the Ld. Commissioner of Income Tax-9, New Delhi [in short ‘Ld. Commissioner] u/s.250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’), whereby the ld. Commissioner sustained the disallowance to the tune of Rs. 8,26,180/-which was made by the Assessing officer for late deposit employees’ contribution qua PF.
At the outset we observe that there is delay 84 days in filling of the instant appeal. The Assessee has filed an application for condonation of delay. Admittedly the impugned order was passed and appeal was filed during the ‘Covid-19 pandemicperiod’ when the entire Nation was on hold and during the ‘pandemic period’, the Apex Court extended the time limit for filling of appeal(s) as well, hence considering the peculiar facts and circumstances, the delay of 84 days in filling of the instant appeal is condoned.
Coming to the merit of the case, we observe that the issue involved in the instant appeal relates to the disallowance/addition of Rs. 8,26,180/-on account of late deposit of employees’ contributions qua PF beyond the due date of deposit as prescribed under the PF Act, however, before the due date of filing of return of income u/s.139(1) of the Act., made by the AO and affirmed by the Ld. Commissioner in impugned order
Being aggrieved, the Assessee is in appeal before us.
Having heard the Ld. DR and perused the material available on record. The Assessee’s claim is against the impugned order, whereas the Ld. DR vehemently supported the same.
5.1 The Ld. CIT(A) while upholding the disallowance/addition qua employee’s contributions towards PF, referred the provisions of section 36(1)(va) of the Act and relied upon the judgment passed by the Hon’ble Delhi High Court in the case of CIT Vs. M/s. Bharat Hotels Ltd., [2019] 410 ITR 417 (Del).
5.2 As it appears from the impugned order, the Assessee claimed, because the employee’s contribution qua PF was deposited before the due date of filing of the return of income u/s 139 of the Act, hence no disallowance is warranted.
5.3 On the contrary Ld. DR while relying upon judgment of the Hon’ble High Courts rendered in the case of CIT Vs M/s. Bharat Hotels Ltd., [2019] 410 ITR 417 (Delhi) refuted the contention/claim of the Assessee.
5.4 We have given thoughtful consideration to the rival contentions/claims of the parties. Admittedly there are judgments in favour of the Assessee’s and the Revenue. Let us see which is more appropriate and relevant.
5.5 The Hon’ble Punjab and Haryana High Court in the case of CIT Vs. M/s Hemla Embroidery Mills (P) Ltd. (366 ITR 167) (P&H HC) and in the case of CIT Vs. M/s Mark Auto Industries Ltd. (358 ITR 43) (P&H HC) has clearly held that the Assessee is entitled to claim deduction of employee’s share of ESI & PF u/s.43B of the Act, if the same has been deposited prior to the filing of return of income u/s.139(1) of the Act.
5.6 The Jurisdictional High Court as well, in the case of CIT Vs. AIMIL Ltd 321 ITR 508affirmed the action of the ITAT, in deleting the addition made by the Assessing Officer under Section 36(1)(va) of the Act, on account of employees’ contributions qua Provident Fund and ESI, deposited before the due date of filing of return.
5.6 The Ld. Commissioner while sustaining the addition, also relied upon the judgment delivered by the jurisdictional High Court in the case of CIT Vs M/s. Bharat Hotels Ltd., [2019] 410 ITR 417 (Delhi) which infact was delivered later on and without considering the precedent on identical issue in the case of CIT Vs. AIMIL Ltd (supra) and it is also a fact that the judgment delivered by the jurisdictional High Court in the case of PCIT vs., Pro Interactive Service (India) Pvt. Ltd., (ITA.No.983/2018 order dated 10.09.2018) is a latest one , wherein the decision of the Hon’ble High Court in the case of CIT Versus AIMIL Ltd., (supra), has been followed by holding as under :-
“In view of the judgment 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(24)(x) of the Act. Appeal is dismissed.”
5.7 From the aforesaid Judgments of the Hon’ble High Courts, it is clear that the Hon’ble Courts have not drawn any distinction between the employee’s and employer’s share qua PF & ESI contributions, hence, the determination of the Ld. CIT(A) is un- sustainable.
5.8 In view of the above discussions, the disallowance to the tune of Rs. 8,26,180/-made by the AO for the assessment year under consideration and confirmed by the CIT(A) is not sustainable, hence, the same stands deleted.
In the result appeal filed by the Assesses is allowed. Order pronounced in the open court on 27/07/2022.