S J WIRE INDUSTRIES ,HARYANA vs. WARD 1(1), FARIDABAD

This appeal filed by the assessee is directed against the order dated 12.03.2021 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi relating to Assessment Year 2019-20.

1. That in the present case, employees’ contribution Rs.2,29,576/- towards ESIC and EPF having been paid by the appellant employer before the date of filing of return of income u/s 139(1) for the present period, such amount could not be added back in the income of the appellant declared in the return of income filed. This addition is against the well settled law on the subject.

2. That the disallowance of deduction as has been made in the present case could not be made by way of intimation u/s 143(1)(a) of the IT Act, 1961. Such a disallowance could be made only after providing an opportunity to the assessee to establish its claim.

3. That the appellant craves leave to add, amend, revise modify, substitute or delete any or all grounds of appeal or/and prayer made.

4. Prayer : In view of the above, it is, therefore, prayed that the impugned assessment order as well appeal order disallowing deduction to the amount of Rs.5,70,838.00 being illegal, arbitrary, beyond jurisdiction and in utter disregards of the true facts and in the circumstances of the case may kindly be quashed in the interest of justice and fair play. 5. That the impugned appeal order dated 12.03.2021 having been received on 13.08.2021, i.e. during the period between 15.03.2020 to 02.10.2021, the limitation period shall be 90 days started from 03.10.2021 in terms of the judgment of the Hon’ble Supreme Court dated 23.09.2021 [Miscellaneous Application No.665 of 2021 in SMW (C) No.3 of 2020]. As such, the present appeal is within the period of limitation.”

4. Before me, 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 me, Learned AR submitted that additions has been made in the intimation issued by CPC, Bangalore u/s 36(1)(va) of 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 in the case 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 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.”

Order pronounced in the open court on 16.06.2022