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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI MANISH BORAD
Assessment Year:2018-19 Sanjeevani Super Speciality DCIT(CPC) Healthcare Bhopal Pvt. Ltd. Bengaluru बनाम/ Bhopal Vs. (Appellant) (Respondent ) P.A. No.AARCS8080L Appellant by Shri S.S. Deshpande, AR Revenue by Shri P.K. Mitra CIT-DR, Date of Hearing: 10.12.2021 Date of Pronouncement: 13 .12.2021 आदेश / O R D E R PER MANISH BORAD, A.M: The above captioned appeal at the instance of Assessee are directed against the order of National Faceless Appeal Centre (in short NFAC), Delhi dated 15.04.2021 which are arising out of the order u/s 143(1) of the Income Tax Act 1961(In short the ‘Act’) dated 16.10.2019 framed by DCIT,CPC, Bangalore.
The assessee has raised following grounds of appeal:
“On the facts and in the circumstances of the case of the assessee Ld. CIT(A) NFAC, Delhi was not justified in confirming addition of Rs.2,27,326/- received by the assessee towards contribution to any provident fund or any fund set up for the welfare of employees and had paid all such sums before the time limit specified under section 139 of the Income Tax Act, 1961.
Brief facts of the case as culled out from the records are that the assessee is a domestic Private Company engaged in the business of running a hospital. Return of income for A.Y. 2018-19 was filed Assessee is obliged to deduct employees contribution towards PF/ESIC and to deposit the same with the concerned authority. During the year there was a delay for deposit of employees contribution of Rs. 2,27,326/- but the amount was deposited before the due date of filing the return of income. CPC vide its information dated 16.10.2019 u/s 143(1) of the Act disallowed the employees contribution of PF/ESIC of Rs.2,27,326/-. Assessee challenged the said disallowance before the ld. CIT(A) claiming that as the assessee has deposited the alleged amount before the due date of filing the return of income u/s 139(1) of the Act, Assessee should get the benefit of section 43B of the Act, but Ld. CIT(A) was not satisfied with the submissions and confirmed the disallowance.
Aggrieved assessee is now in appeal before the Tribunal. 4. At the outset, Ld. counsel for the assessee submitted that the issue raised in the instant appeal is squarely covered in favour of the assessee by various decisions including the decision of this tribunal in the case of ACIT vs. M/s Parag Fans & Cooling System Pvt. Ltd. (2021) 9 ITJ online 118. Reliance was also placed on following decisions: a.Sagun Foundry (P) Ltd. vs. CIT [2007] 78 taxmann.com 47 (Allahabad) b. Bihar State Warehousing Corporation Ltd. vs. DCIT [2017] 393 ITR 386(Patna) c. Pr. CIT vs. Rajasthan State Beverage Corpn. Ltd. (20017) 250 Taxman 32 (Rajasthan) d. Pr. CIT vs. Hind Filter Ltd. [2018] 90 taxmann.com 51(Bombay)
Per contra ld. DR submitted that the issue is debatable and some of the Hon'ble High Courts have also decided against the assessee on this particular issue, but agreed that no decisions on this issue have been given by the Hon'ble Jurisdictional High Court. Reliance placed on following decisions:
1.Pr. CIT vs. Suzlon Energy Ltd. (2020) 115 Taxmann.com 340 (Gujarat) b. CIT vs. Merchem ltd. [2015} 378 ITR 443 (Kerala) c. CIT vs. South India Corporation Ltd. (2015) 232 Taxman 241(Kerala) 6. We have heard rival contentions and perused the records placed before us. Sole issue relates to disallowance of employees contribution of PF/ESIC at Rs.2,27,326/-. We note that as per the provisions of section 36(1)(va) of the Act “any sum received by the assessee from any his employee’s towards contribution to any PF or superannuation fund or any fund set up under the provisions of Employee Estate Insurance Act, 1948 or any other fund for the welfare of such employees is allowed as an expenditure if such sum is credited by the employer to the employees account in the relevant fund or funds on or before the due date”. And for the purpose of this section 36(1)(va) explanation (1) to this section provides that “ ‘due date’ means the date by which the assessee is required as an employer to credit an employee’s contribution to the employee’s account in the relevant fund under any Act, rule, order or notification issued there under or under any standing order, award, contract or service or otherwise.
We further find that the alleged disallowance was made as there was a delay in deposit beyond the due date provided under relevant Act which deals with PF/ESIC. But undisputedly the amount has been deposited with the relevant fund before the due date of filing the return of income u/s 39(1) of the Act.
We find that this Tribunal in the case of M/s Industrial Filters and Fabrics Pvt. Ltd. vs. Asstt. CIT (2020) 8 ITJ online 6, (2020) 37 ITJ 61 has dealt delay with very same issue and on observing similar set of facts deleted the disallowance relying on various judgments observing as follows:
We have heard both the parties, perused the materials available on record and gone through the orders of the Authorities below. In the light of judgment of Hon'ble Rajasthan High Court in the case cited (supra), wherein the Hon'ble High Court has held as under: “3. However, taking into consideration, the judgement of this court in the case of assessee itself in D.B. Income Tax Appeal No.150/2016 (Principal Commissioner of Income Tax. Jaipur-2 v. M/s. Rajasthan State Beverages Corpn. Ltd.) decided on 4.8.2016 wherein Division Bench observed as under:
"5. So far as the question relating to privilege fees amounting to Rs, 26.00 Crores in the instant year as well as the deduction of claim of Rs. 17,80,765/- on account of Provident Fund (PF) and ESI is concerned, the Court has extensively considered the aforesaid two questions in assessee's own case vide judgement and order dated 26.5.2016 referred to (supra) and has held that the privilege fees being a revenue expenditure, is required to be allowed as a revenue expendit11re. This court in the aforesaid case has also allowed the claim of the assessee, in so far as payment of PF & ESI etc. is concerned, on the finding of fact that the amounts in question were deposited on or before the due date of furnishing of the return of income and taking in consideration judgement of this Court in Commissioner o/Income Tax v. State Bank of Bikaner & Jaipur and Commissioner of Income Tax v. Jaipur Vidyut Vitaran Nig,lII!1 Ltd (2011) 363 ITR 70 (Raj.) : (2014) 265 CTR 471 and accordingly both the questions are covered by the aforesaid judgment and against the revenue.
Subsequently in the case of ACIT vs. M/s Parag Fans & Cooling System Pvt. Ltd.(supra) similar view was taken by this Tribunal. Relevant extract is reproduced below:
We find that there occurred some delay on the part of the assessee in depositing the ESIC and EPF contribution of employees. However this is not in dispute that the total amount of employees contribution was deposited in Treasury before the due date of filing of return of income i.e. 30.11.2014. Under these given facts and circumstances Ld. CIT(A) deleted the disallowance observing as & 562/Ind/2018 Parag Fans Cooling System Pvt. Ltd follows:-
Ground No.5:- Through this ground of appeal the appellant has challenged the addition of Rs4,17,302/- on account or disallowance of EPF and ESIC late deposit. The appellant made the above payments before filing of return of income. The above expenditure is allowable expenditure in view of Hon'ble ITAT, lndore's decision in the case of Asst. CIT v .Indira Export Pvt Ltd. (201 3)
21. ITJ 372 (Trib. - Indore)- Employees contribution to provident Fund- Employees contribution to Provident Fund -Employees contribution to Provident Fund - Deletion of second proviso to section 43B- HELD-In view of CIT v Alom Extrusions Ltd. (2010) 14 ITJ 133(SC), deletion of second proviso is retrospective-Therefore, even if employees contribution is deposited before due date of filing of return, same is allowable. Therefore, the addition made by the AO amounting to Rs.4,17,302/- is deleted. Therefore, the appeal on this ground is Allowed.
10. We further find that ld. DR has submitted that for the instant issue is debatable and there are various judgments against the assessee also. We, however, find that Hon'ble Supreme Court in the case of CIT vs. Vegetable Products Ltd. 88 ITR 192(SC) has held that “if two reasonable constructions of a taxing provision are possible that construction which favours the assessee must be adopted”.
11. We, therefore, under the given facts and circumstances of the case and taking a consistent view in light of judicial precedence or discussed above as well as the decision taken by this Tribunal in the case of M/s Industrial Filters and Fabrics Pvt. Ltd. & ACIT vs. M/s Parag Fans & Cooling System Pvt. Ltd.(supra) delete the disallowance and allow grounds raised by the assessee.
In the result, appeal of the assessee in ITANo.116/Ind/2021 is allowed.
Order was pronounced as per Rule 34 of I.T.A.T. Rules 1963 on .13.12.2021