BHAGWATI SECURITY SERVICES,SAHARANPUR vs. ITO, WARD-3(3)(3), SAHARANPUR

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ITA 1674/DEL/2021Status: DisposedITAT Delhi02 March 2022AY 2017-194 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 held that the disallowance of delayed deposit of employee's PF and ESI contributions is covered by the Delhi High Court judgment in PCIT vs Pro Interactive Service (India) Pvt. Ltd. Therefore, the disallowance was directed to be deleted.

What were the facts?

The assessee's return declared income from business at Rs. 4,15,636. During processing, the CPC disallowed employee PF and ESI contributions for AY 2017-18, assessing income at Rs. 19,28,726. The CIT(A) confirmed this addition.

What were the issues?

Whether delayed deposit of employees' PF and ESI contributions for AY 2017-18 are disallowable as expenditure, considering amendments to Sections 36(1)(va) and 43B.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 36(1)(va),Section 43B

AI-generated summary — verify with the full judgment below

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

Before: SHRI KUL BHARAT

For Respondent: Shri Sanjiv Mahajan, Sr.DR
Hearing: 02.03.2022Pronounced: 02.03.2022

BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER Year : 2017-18] Bhagwati Security Services, vs ITO, First Floor, Kamal Market, Ward-3(3)(3), Paper Mill Road, Brijesh Nagar, Saharanpur. Saharanpur, Uttar Pradesh-247001. PAN-AADFB5048A APPELLANT RESPONDENT Appellant by None Respondent by Shri Sanjiv Mahajan, Sr.DR Date of Hearing 02.03.2022 Date of Pronouncement 02.03.2022 ORDER

PER KUL BHARAT, JM :

1.

This appeal filed by the assessee for the assessment year 2017-18 is directed against the order of Ld. CIT(A), National Faceless Appeal Centre (“NFAC”) dated 20.09.2021.

2.

The assessee has raised following grounds of appeal:-

1. “That the order of Ld. CIT(A) is illegal, invalid and against the law.

2. That the Ld. CIT(A) has erred on the facts and in law while dismissing the appeal of the assessee on the basis of amendment to Section 36(1)(va) and Section 43B of the I.T. Act, 1961 without appreciating the fact that such amendments would apply to the assessment year 2021-22 Page | 1

and subsequent assessment years as clearly mentioned in the memorandum explaining the provisions of the Finance Bill, 2021. 3. That the Ld. CIT(A) has erred on the facts and in law while dismissing the appeal of the assessee in complete disregard to the settled legal position based on various judicial precedents from different courts. 4. That the grounds of appeal are without prejudice to each other.

5. That the appellant respectfully craves to add, amend, alter and /or forego any ground at or before the time of hearing.”

3.

No one appeared on behalf of the assessee at the time of hearing. Therefore, the appeal was taken up for hearing in the absence of assessee.

4.

Facts giving rise to the present appeal are that the assessee filed its income tax return on 28.10.2017 u/s 139 of the Income Tax Act, 1961 (“the Act”) declaring income from business/profession at Rs.4,15,636/-. While processing the return u/s 143(1) of the Act, the Dy.CIT, Central Processing Centre (“CPC”), Bengaluru computed disallowance and assessed income at Rs.19,28,726/- against declared income from business or profession of Rs.4,15,636/- after making adjustment regarding allowability of PF and ESI contribution pertaining to employees for Assessment Year 2017-18.

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 Ld. Sr.DR 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 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 Page | 3 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.

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