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Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI
Before: SHRI KUL BHARAT & SHRI PRADIP KUMAR KEDIA
Consolidated Appeals (52)
ORDER PER BENCH : The present appeals are filed by the above mentioned assessees feeling aggrieved by the orders passed by appellate authority for various assessment years mentioned hereinabove.
Since the issue in all the appeals is common and is related to disallowance of employee’s contribution of PF/ESI on account of delay in deposits as per the respective Acts. Therefore, we clubbed all of them together for the sake of brevity and convenience and disposing the same by way of this consolidated order. However, we are taking [Assessment Year -2019-20] as a lead case wherein the assessee has raised the following grounds:
1. “That the Ld. CIT(A) has not afforded a proper opportunity of being heard in so far as the relying on certain judgments not confronted to the assessee before rejecting the contentions in the Written Submissions filed, thereby violating the principles of natural justice.
2. That the Intimation order by CPC u/s 143(1) dated 28/07/2020 is bad in law on the facts of the case and that Ld. Commissioner of Income Tax (Appeals) has erred in sustaining the addition made in the Intimation.
7 3. That the CIT(A) has grossly erred in sustaining the addition of Rs. 6,75,861/- made in the Intimation order by CPC, u/s 143(1), of the ESI/PF of Employees Contribution paid before the due date of filing the return of income. That the addition so made in the Intimation needs to be deleted.
That the Ld. CIT(A) has erred in not appreciating that the CPC has no power to make such adjustment u/s 143(1) when no such disallowance has been reported by the Tax Auditor in Clause 20(b) of the Form 3CD. Hence the illegal disallowance made by CPC of Rs.6,75,861/- needs to be deleted.
That the assessee craves indulgence to add, amend, alter, modify or take additional grounds of appeal
.”
3. Similar grounds with different amounts and assessment years have been raised in other appeals but however, the sum & substance and the issues involved in all the appeals are identical.
4. Before us, at the outset, Learned AR submitted that the sole grievance of the assessee is confirming the additions on account of delay in deposit of employee’s contribution towards provident fund and ESI fund.
5. Before us, Learned AR submitted that additions have been made in the intimation issued by CPC, Bangalore u/s 36(1)(va) of the Income Tax Act, 1961 (“the Act”) for the reason that the 8 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 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.
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 dated 26.08.2021. order 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 9 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. 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. 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 Ld. DR on the amendment brought out by Finance Act, 2021 is concerned, “notes on clauses” to the 10 Finance Bill 2021 clearly states that the amendment will take effect from 01st April 2021 and will prospectively 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, the 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 all the above-stated matters, the Revenue had not contended that the assessee has deposited the contribution after the filing of the return of income.
Apropos to Assessment Year 2019-20 in the case of Canary Agro Chemicals Pvt.Ltd., appearing at Serial No.14 captioned above, it was pointed out that the belated payment of employee’s contribution towards PF & ESI in the proceedings having regard to the respective Acts, have already been disallowed by the assessee while computing the taxable income and thus such disallowance again made on account