SETHI HOSPITAL PRIVATE LIMITED,GURGAON vs. ITO, WARD-23(1), NEW DELHI

PDF · subscribers
ITA 1718/DEL/2021Status: DisposedITAT Delhi22 April 2022AY 2018-194 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal followed the Delhi High Court's decision in PCIT vs Pro Interactive Service (India) Pvt.Ltd. It held that belated payment of employee's contribution to EPF & ESI should not be treated as deemed income of the employer.

What were the facts?

The assessee's employees' contribution to PF & ESI was deposited late. The CPC made an adjustment for this delay, which was confirmed by the CIT(A). The assessee appealed this decision.

What were the issues?

Whether the delay in depositing employees' contribution to PF & ESI leads to disallowance of the expenditure as a deduction.

Which sections of the Income-tax Act were involved?

Section 36(1)(va)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, DELHI “SMC” BENCH: NEW DELHI

Before: SHRI KUL BHARAT

For Appellant: Shri Sandeep Kumar, CA
For Respondent: Shri Sanjiv Mahajan, Sr.DR
Hearing: 03.03.2022Pronounced: 22.04.2022

ORDER

PER KUL BHARAT, JM :

1.

1. This appeal filed by the assessee for the assessment year 2018-19 is directed against the order of Ld. CIT(A), National Faceless Appeal Centre (“NFAC”) dated 01.10.2021.

2.

The assessee has raised following grounds of appeal:-

1.

“The assessment order passed by Assessing Officer is bad in law, is against facts and circumstances of the case, is against provisions of the Income Tax Act and against law of natural justice.

2. The Ld. Commissioner of Income tax (Appeals) National Faceless Appeal Centre has grossly erred in confirming the addition made by Assessing Officer u/s 36(1)(va) of Rs.10,83,460/- is against facts and circumstances of the case, is against decided cases by Hon. Courts, therefore, is against provisions of the Income tax Act, 1961 and is also bad in law. 3. The assessee craves leave to amend, add or modify any grounds of appeal

before the disposal of the appeal.” FACTS OF THE CASE

3. Facts giving rise to the present appeal are that Central Processing Centre (“CPC”), Bengaluru vide intimation u/s 143(1) of the Income Tax Act, 1961 (“the Act”) for Assessment Year 2018-19 made adjustment regarding delay in deposit of employees contribution to PF & ESI.

4. Aggrieved against this, the assessee preferred appeal before Ld.CIT(A), who confirmed the addition.

5.

Now, the assessee is in appeal before this Tribunal.

6.

Ld. Sr. DR vehemently submitted that law is clear in this respect and he relied upon the decision of Ld.CIT(A).

7.

I have heard authorized representatives of the parties and perused the material available on record and gone through the orders of the authorities below. The issue in this appeal is related to disallowance of expenditure on account of delay in deposit of employees contribution related to EPF & ESI. The issue is squarely Page | 2 covered by the judgement of 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.”

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.

8.

In the result, the appeal of the assessee is allowed.

More judgments on Section 36(1)(va)

All 6,054 judgments and leading authorities on Section 36(1)(va) →

Recent GST High Court judgments

Search GST case law →