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Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI
Before: SH. ANIL CHATURVEDI & SH. ASTHA CHANDRA
ORDER
PER ANIL CHATURVEDI, AM:
This appeal filed by the Revenue is directed against the order dated 15.10.2018 passed by the Commissioner of Income Tax (Appeals)-28, New Delhi relating to Assessment Year 2012-13.
Brief facts of the case as culled out from the material on record are as under:-
Assessee is a company stated to be engaged in the business of manufacturing of readymade garments and dyeing and printing of yarn. assessee electronically filed return of income on 2 27.09.2012 for A.Y. 2012-13 declaring total income of Rs.22,21,46,460/-. The case was selected for scrutiny and therefore assessment was framed u/s 143(3) of the Act vide order dated 29.03.2016 and the total income was determined at Rs.24,21,05,920/-. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who vide order dated 15.10.2018 in Appeal No.292/17-18 partly allowed the appeal of the assessee. Aggrieved by the order of CIT(A), Revenue is now in appeal and has raised the following grounds:
1. “Whether on the facts and circumstances of the case and also in law the Ld CIT(A) erred in deleting the disallowance made by the AO amounting to Rs.1,94,83,047/- on account of late payment of contribution towards EPF/ESI, which is not allowable deduction u/s 36(1)(va) and in view recent judgment of Hon’ble Kerala High Court in the case of M/s. Popular Vehicles and Services vs. CIT Ernakulam, [2018] 96 taxmann.com 13 (Kerala).”
2. That the appellant craves the leave to add, alter or amend any of the ground(s) of appeal before or during the course of hearing of the appeal.”
During the course of assessment proceedings, AO noticed that payment towards employee’s contributions to PF & ESI was deposited after the due date prescribed in the relevant Act. AO was of the view that the delayed payment of employee’s contribution to ESI & EPF is not allowable in view of Section 2(24)(x) r.w.s 36(1)(va) of the Act. He accordingly disallowed the aggregate payment amounting to Rs.1,94,83,047/-. Aggrieved by the order of AO, assessee carried the matter before the CIT(A). CIT(A) noted that the ESI & EPF contributions were deposited before the due date of filing of the return of income and thereafter by following the decisions in the case of CIT vs. AIMIL Ltd. [2010]
3 188 Taxman 265 (Delhi) and CIT vs. Alom Extrusions Ltd. [2009] 185 Taxman 416 (SC) directed the AO to allow the deduction. Aggrieved by the order of CIT(A), Revenue is before us.
Learned DR on the other hand supported the order of lower authorities and also placed reliance on the decision of Hon’ble Kerala High Court in the case of M/s. Popular Vehicles and Services vs. CIT Ernakulam, [2018] 96 taxmann.com 13 (Kerala). 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 4 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 dismiss the ground of Revenue.