LIBRA INFRA PROJECTS PRIVATE LIMITED,NEW DELHI vs. ITO, WARD-15 (3), NEW DELHI

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ITA 1708/DEL/2021Status: DisposedITAT Delhi02 March 2022AY 2018-196 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 for delayed deposit of employee contributions to PF and ESI is not sustainable. It followed the jurisdictional High Court's decision which held that belated payments are not to be treated as deemed income.

What were the facts?

The assessee deposited employee contributions to PF and ESI after the due date prescribed under the respective Acts. The CPC made an adjustment under Section 143(1) for this delay, which was confirmed by the CIT(A).

What were the issues?

Whether disallowance of employee's contribution to PF/ESI deposited after the due date is justified. Whether such delayed deposit makes the amount taxable as income.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(1)Show list

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

Before: SHRI KUL BHARAT

For Appellant: Shri Amit Goel, CA &, Shri Nippun Mittal, CA
For Respondent: Shri Sanjiv Mahajan, Sr.DR
Hearing: 02.03.2022Pronounced: 02.03.2022

Libra Infra Projects Pvt.Ltd., vs ITO, WZ-241, Palam Village, Ward-15(3), New Delhi-110045. New Delhi. PAN-AAACL6627K APPELLANT RESPONDENT Appellant by Shri Amit Goel, CA & Shri Nippun Mittal, CA Respondent by Shri Sanjiv Mahajan, Sr.DR Date of Hearing 02.03.2022 Date of Pronouncement 02.03.2022 ORDER PER KUL BHARAT, JM : Both appeals filed by the assessee for the assessment years 2018-19 and 2019-20 are directed against the order of Ld. CIT(A), National Faceless Appeal Centre (“NFAC”) dated 22.09.2021 & 23.09.2021 respectively. Since the similar grounds have been raised, both appeals of the assessee were taken up for hearing together and are being decided by way of this consolidated order for the sake of brevity.

Year : 2018-19] 2. First I take up the assessee’s appeal in pertaining to Assessment Year 2018-19. The assessee has raised following grounds of appeal:

1. “On the facts and circumstances of the case and in law, the disallowance of Rs. 8,90,857/- made in the Intimation u/s 143(I) without jurisdiction and beyond the scope of provisions of section 143(I) and CIT(A)/National Faceless Appeal Centre erred in not holding so.

2.

On the facts and circumstances of the case and in law, the CIT (A)/National Faceless Appeal Centre erred in confirming the addition of Rs.8,90,857/- made by the assessing officer/CPC on the account of disallowance u/s 36(1)(va) of the Act. 3. The appellant craves leave to add one or more ground of appeal or to alter / modify the existing ground before or at the time of hearing of appeal. The aforesaid grounds of appeal are without prejudice to each other.”

3.

Facts giving rise to the present appeal are that the assessee filed return of income on 08.10.2018 declaring total income of Rs.14,11,310/-. The assessee had deposited the employees contribution to PF of Rs.7,76,721/- and employees contribution to ESI of Rs.1,14,136/- with the regulatory authorities after the due date prescribed under EPF and ESI Act. Thereafter, Central Processing Centre (“CPC”), Bengaluru u/s 143(1) of the of the Income Tax Act, 1961 (“the Act”) made adjustment regarding delay in deposit of employees contribution to PF & ESI.

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. representatives of both the parties 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 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. [Assessment Year : 2019-20] 9. Now, I take up the assessee’s appeal in ITA No.

1709/Del/2021 pertaining to Assessment Year 2019-20. The assessee has raised following grounds of appeal:-

1. “On the facts and circumstances of the case and in law, the disallowance of Rs. 8,56,109/- made in the Intimation u/s 143(I) without jurisdiction and beyond the scope of provisions of section 143(I) and CIT(A)/National Faceless Appeal Centre erred in not holding so.

2. On the facts and circumstances of the case and in law, the CIT (A)/National Faceless Appeal Centre erred in confirming the addition of Rs.8,56,109/- made by the assessing officer/CPC on the account of disallowance u/s 36(1)(va) of the Act.

3. The appellant craves leave to add one or more ground of appeal

or to alter / modify the existing ground before or at the time of hearing of appeal. The aforesaid grounds of appeal are without prejudice to each other.”

10. The facts are identical as were in pertaining to Assessment Year 2018-19. The Ld. Representatives of the parties have adopted the same arguments as were in [Assessment Year 2018-19]. My direction in ITA No.1708/Del/2021 [Assessment Year 2018-19] would apply Mutatis Mutandi in this year as well. Thus, grounds raised by the assessee in the appeal are allowed.

11.

In the result, the appeal of the assessee is allowed.

12.

In the final result, both appeals of the assessee are allowed.

Order pronounced in the open Court on 02nd March, 2022.

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