YEEKAY ENGINEERS PVT. LIMITED (NOW AMALGAMATED WITH MEHRA METALS COMPONENTS PRIVATE LIMITED),FARIDABAD vs. DCIT, CPC, BANGALORE

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.

1. “That the Ld. CIT(A) vide his order u/s 250 of the Income Tax Act, 1961 (“Act”) dated 28/08/2021 erred on facts and in law in confirming the adjustment/disallowance made in intimation u/s 143(1) dated 16/10/2019 passed by CPC Bangalore of Rs.12,52,401 u/s 36(1)(va) of the Act on account of alleged delayed payment of ESI and EPF.

2. That disallowance of such nature of Rs.12,52,401 could not have been confirmed by Ld. CIT(A) keeping in view the limited powers as available for making adjustment u/s 143(1) of the Act. 3. That on the facts and circumstances of the case, the Ld. CIT(A) has erred both on facts and in law in confirming such adjustment/disallowance of Rs.12,52,401/-in view of the favourable and binding judgments of jurisdictional and other High Courts.

7 4. That issues which are debatable in nature cannot be subjected to adjustment/disallowance u/s 143(1) of the Act and from this angle also, the Ld. CIT(A) ought not to have confirmed the adjustment/disallowance of Rs.12,52,401/-.

6. That without prejudice to Ground Nos. 1 to 5 above, such disallowance of Rs.12,52,401/-as made is very excessive.

7. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred on facts and in law in confirming the action of CPC in charging interest u/s 234A at Rs.2,827 and u/s 234C at Rs.9,189. At any rate, without prejudice, such interest as charged is very excessive.

8. That the Appellant reserves its right to add, amend/modify the 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 8 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 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.

“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 10 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.”

11 10. We have proceeded to conclude the issue of allowability of expenses attributable to employee provident fund and employee state insurance scheme on the assurance that the employee’s contributions towards PF & ESI have been deposited before the due date of filing of return of income. However, the Revenue shall be at liberty to seek restoration of the appeal where it is found as a matter of fact that the assessee has failed to deposit the employee’s contribution before the due date of filing of return of income stipulated u/s 139(1) of the Act in accordance with law. In view of the above and respectfully following the decision of the Hon’ble Jurisdictional High Court of Delhi cited hereinabove, we allow the appeals filed by the captioned assessees.

12 to rectification u/s 154 of the Act at the threshold. Thus, the additions on accounts of belated employee’s contribution is neither permissible under the normal provisions nor under section 154 of the Act insofar as this appeal is concerned.

Order pronounced in the open court on 17.05.2022.