SKYLINE INFRA ENVIRO PVT. LTD,DELHI vs. WARD 22(2), DELHI

O R D E R PER KUL BHARAT, JM:

This appeal, by the assessee, is directed against the order of learned CIT(Appeals)- 8, New Delhi dated 30.07.2020, pertaining to the assessment year 2017-18.

“1. That on the facts and circumstances of the case, the order passed by the Learned Commissioner of Income Tax (Appeal) (CIT(A)) under Section 250(6) of I.T. Act, 1961, upholding addition of Rs. 5,21,718/- on account of deposit of P.F. contribution by employees before the last date of filing Income Tax Return u/s. 139(1) of the Act is arbitrary, unjustified, bad in law as binding judgements of Hon’ble High Courts and various Benches of Learned I.T.A.T have not been considered judicially.

2. That on the fact and circumstances of the case, the Ld/- CIT(A) has erred both on facts and in law in confirming disallowance u/s 36(l)(va) of the Act of Rs. 5,21,718/- without considering the various Judicial pronouncements by the Jurisdictional Delhi High Court and other Hon’ble High Courts which is arbitrary, unjustified and bad in law.

Skyline Infra Enviro Pvt. Ltd. vs. ACIT

4. The above Grounds of Appeal are without prejudice to one another

5. The Appellant craves the right to add, amend, alter, withdraw or forgo any ground or grounds of appeal before or at the time of hearing.”

3. The only effective ground in this appeal is against disallowance u/s 36(1)(va) of the Income-tax Act, 1961, hereinafter referred to as the “Act”. The facts giving rise to the present appeal are that a sum of Rs. 5,21,718/- on account of contribution received from employees for PF and ESI was deposited after the due date prescribed in the respective Acts. Therefore, the Central Processing Centre u/s 143(1) of the Act made adjustment and disallowed the same. Aggrieved against this the assessee preferred appeal before the learned CIT(Appeals), who, after considering the submissions, dismissed the appeal.

Now the assessee is in appeal before the Tribunal.

Skyline Infra Enviro Pvt. Ltd. vs. ACIT 6. I have heard the rival submissions, perused the material on record and gone through the orders of authorities below. The issue in this appeal is regarding disallowance of Rs. 5,21,718/- on account of delay in depositing of employees’ contribution to PF and ESI. I find that this issue is covered in favour of the assessee by the judgment of the Hon’ble Jurisdictional High Court in the case of CIT Vs. AIMIL Ltd. (2010) 321 ITR 508 and also the judgment in the case M/s Pro Interactive Services (India) Pvt. Ltd. in ITA no. 983/2018.

If the employees' contribution is not deposited by the due date prescribed under the relevant Acts and is deposited late, the employer not only pays interest on delayed payment but can incur penalties also, for which specific provisions are made in the Provident Fund Act as well as the ESI Act. Therefore, the Act permits the employer to make the deposit with some delays, subject to the aforesaid consequences. In so far as the Income-tax Act is concerned, the assessee can get the benefit if the actual payment is made before the return is filed, as per the principle laid down by the Supreme Court in Vinay Cement [2009] 313 ITR (St.) 1.

Skyline Infra Enviro Pvt. Ltd. vs. ACIT fund (EPD) and employee’s State Insurance Scheme (ESI) as deemed income of employer under section 2(24)(x) of the Act.”