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Income Tax Appellate Tribunal, DELHI BENCH “SMC”: NEW DELHI
Before: SHRI KUL BHARAT
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.
The assessee has raised following ground of appeal:
“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
That the Learned Commissioner of Income Tax (Appeals) has further erred both on facts and in law while disposing of the appeal in ignoring the submissions and explanations. Thus, the order of CIT (A) is vitiated in law for non- consideration of the factual and legal submissions made and thus suffers from the vice of arbitrariness.
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.
Learned counsel for the assessee at the outset contended that the issue is squarely 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 as also the judgment in the case M/s Pro Interactive Services (India) Pvt. Ltd. in ITA no. 983/2018.
Learned DR opposed the submissions and supported the orders of the authorities below.
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.
The Hon’ble Jurisdictional High Court in case of CIT vs. AIMIL Ltd. (2010) 321 ITR 508 (Delhi), has held as under:
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.
The Hon’ble Jurisdictional High Court in the case of Pr.CIT Vs. M/s Pro Interactive Services (India) Pvt. Ltd. in vide order dated 10.09.2018 in ITA no. 983/2018 has held as under: “In view of the judgment of the Division Bench of Delhi High Court in Commissioner of Income Tax Vs. 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
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.”
Therefore, respectfully following the binding precedent, I hereby delete the addition. The grounds raised in this appeal are allowed.
Assessee’s appeal is allowed.