VED PARKASH NAGAR,FARIDABAD vs. ITO, WARD-25, FARIDABAD

ORDER

PER KUL BHARAT, JM :

1.0. “That on the facts and in the circumstances of the case, the disallowance, imposition of tax and interest with reference thereto, the quantification of taxable income and the tax liability, has been grossly unjustified, erroneous and unsustainable and necessary direction be given to the Ld. AO (CPC) to give appropriate relief in accordance with law. Page | 1

2.0. That on the facts and in the circumstances of the case, the Ld. CIT(A) was not justified and grossly erred in confirming addition of Rs. 21,74,460/- without considering the fact that the same is out of the preview of section 143(1) of the Act. 3.0. That on the facts and in the circumstances of the case, and without prejudice to the Ground No. 2.0 above, the Ld. CIT(A) was not justified and grossly erred in confirming the addition of Rs. 21,74,460/- made by the Ld. AO on account of payment made for employee contribution to Provident Fund and ESI, despite it has been paid after the due date as prescribed in the PF and ESI Act but on or before the filing of its original return of Income. 4.0. The appellant craves leave, to add, to amend, modify, rescind, supplement, or alter any of the grounds stated here in above, either before or at the time of hearing of this appeal.”

FACTS OF THE CASE 3. Facts giving rise to the present appeal are that the assessee filed return of income declaring total income at Rs.18,26,553/-. The said return was processed u/s 143(1) of the of the Income Tax Act, 1961 (“the Act”) by the Central Processing Centre (“CPC”), Bangalore determining total income at Rs.40,01,008/- in which the adjustment of Rs.21,74,460/- was made to the return of income on account of deemed income u/s 36(1)(va) r.w.s. 2(24)(x) of the Act for late deposit of employee’s contribution to PF and ESI.

“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 Page | 3 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.”

Therefore, respectfully following the ratio laid down by the Hon’ble Jurisdictional High Court in the above-mentioned binding precedent, I hereby direct the Assessing Officer to delete the disallowance. Thus, grounds raised by the assessee are allowed.