CMI LTD.,NEW DELHI vs. DCIT, CIRCLE 5(2), NEW DELHI

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ITA 2319/DEL/2019Status: DisposedITAT Delhi27 April 2022AY 2013-144 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 held that if employee contributions to PF and ESI are deposited before the due date of filing the return of income under Section 139(1), no disallowance should be made. The amendment to Section 36(i)(va) was held to be prospective.

What were the facts?

The assessee company made delayed deposits of employee contributions to PF and ESI. The Assessing Officer (AO) made an addition of Rs. 2,35,239/- on this account. The CIT(A) upheld the addition.

What were the issues?

Whether disallowance under Section 36(i)(va) is warranted for delayed deposit of employee's PF and ESI contributions when deposited before the due date of filing the return of income.

Which sections of the Income-tax Act were involved?

Section 36(i)(va),Section 2(24)(x),Section 139(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH, ‘B’: NEW DELHI

Before: SHRI R. K. PANDA & SHRI ANUBHAV SHARMA

Hearing: 27.04.2022Pronounced: 27.04.2022

ORDER PER R.K. PANDA, AM, This appeal filed by the assessee is directed against the order dated 31.01.2017 of the learned CIT(A)-2, New Delhi, relating to AY 2013-14.

2.

The addition of Rs.2,35,239/- by the AO on account of delayed contribution to PF & ESI and upheld by the ld. CIT(A) is the only issue raised by the assessee in the grounds of appeal.

2.1. Facts of the case, in brief, are that the assessee is a company engaged in the business of manufacturing of power cables and insulated wires and cables. It filed its return of income on 29.03.2014 declaring total income of Rs.2,99,04,190/-. The AO completed the assessment u/s143(3) on 14.03.2016, wherein, he made addition of Rs.2,35,239/- u/s 36(i)(va) of the Act on account of late deposit of PF and ESI contributed by employees as per the following details:-

S.No. Name of Fund Employees Actual Date Due Date Share of Payment

Provident Fund 65731 22.05.2012 15.05.2012 1 Provident Fund 61885 15.08.2012 2 28.08.2012 3 Provident Fund 10885 22.09.2012 15.09.2012

4 Provident Fund 74999 22.02.2013 15.02.2013 5 Employees 10707 26.02.2013 21.02.2013 State Insurance 6 Employees 11032 03.05.2013 21.04.2013 State Insurance 235239

3.

In appeal, the ld. CIT(A) sustained the addition u/s 36(i)(va) r.w.s. 2(24)(x) of the Act.

4.

Aggrieved with such order of the Ld. CIT, the assessee is in appeal before the Tribunal.

5.

We have heard the rival arguments made by both the sides and perused the record. Admittedly, the employee’s contribution to PF & ESI has been deposited by the assessee prior to the due date of filing of return u/s 139(1) of the Act.

The Co-ordinate Benches of the Tribunal are taking the consistent view that if the employee’s contribution to PF & ESI are deposited prior to the due date of filing of the return u/s 139(1) then no disallowance u/s 36(i)(va)r.w.s 2(24)(x) shall be made. It has also been held that the amendment to provisions of section 36(i)(va) are prospective in nature and not retrospective. Since, the assessee in the instant case has admittedly deposited the employee’s contribution to PF & ESI before the due date of filing of return, therefore, we set-aside the order of the ld. CIT(A) and direct the AO to delete the addition. The ground raised by the assessee is accordingly allowed.

6.

In the result, the appeal filed by the assessee is allowed.

The Order was pronounced in the open court at the time of hearing itself i.e. on 27.04.2022.

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