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Income Tax Appellate Tribunal, DELHI “SMC” BENCH: NEW DELHI
Before: SHRI KUL BHARAT
ORDER PER KUL BHARAT, JM : This appeal filed by the assessee for the assessment year 2018-19 is directed against the order of Ld. CIT(A), National Faceless Appeal Centre (“NFAC”) dated 18.08.2021. The assessee has raised following grounds of appeal:-
1. “That the Ld CIT(A)-NFAC has erred in facts and in law in sustaining an addition of Rs. 9,41,106.00 on illegal and untenable grounds. Hence, the addition as such may be deleted.
2. The Ld AO has erred in law and on facts in invoking the provisions of section 36(va) for making addition of late Page | 1 deposits of ESI and EPF as per due date under respective act which is against the spirit of law and intention of legislature. The Honorable CIT(A)-NFAC has erred in confirming the same. Hence, the addition as such may be deleted.
3. The Ld AO has erred in law and on facts for making addition of late deposits of ESI and EPF ignoring the facts that under PF act employer contribution includes employee contribution and hence the section 43B will apply and not 36(va). The Honorable CIT(A)-NFAC has erred in confirming the same. Hence, the addition as such may be deleted.
4. That the LD AO(CPC) has erred in facts and in law in making an addition of Rs. 9,41,106 while processing u/s 143(1) on illegal and untenable grounds. The Honorable CIT(A)-NFAC has erred in confirming the same. Hence, the addition as such may be deleted.
5. That the LD AO(CPC) has erred in facts and in law in making an addition of Rs. 9,41,106 while processing u/s 143(1)(iv) on illegal and untenable grounds. The Honorable CIT(A)-NFAC has erred in confirming the same. Hence, the addition as such may be deleted.
6. That the Honorable CIT(A)-NFAC has erred in law and on facts in sustaining the addition of Rs. 9,41,106 ignoring the facts that condition stipulated in section 36(va) is impossible to be performed by him. Hence, the addition as such may be deleted.
7. That the appellant craves leave to add, substitute, modify or delete any ground of appeal
on or before the date of hearing. All the above grounds of appeal are without prejudice to each other.”
2. No one appeared on behalf of the assessee at the time of hearing. The notice sent through speed post was returned with remark “address left”. The assessee has not provided any new address to the Registry. Therefore, the appeal was taken up for hearing in the absence of assessee.
Facts giving rise to the present appeal are that the assessee filed return of income for Assessment Year 2018-19 on 05.11.2018 declaring total income of Rs.3,42,135/-. The same was processed u/s 143(1) of the Income Tax Act, 1961 (“the Act”) at Rs.12,83,241/- by the DCIT, Central Processing Centre (“CPC”), Bangalore by disallowing a sum of Rs.9,41,106/- being late payment of employee’s contribution of PF and ESI.
Aggrieved against this, the assessee preferred appeal before Ld.CIT(A), who confirmed the addition.
Now, the assessee is in appeal before this Tribunal.
Ld. Sr. DR vehemently submitted that law is clear in this respect and he relied upon the decision of Ld.CIT(A).
I have heard the Ld. Sr.DR and perused the material available on record and gone through the orders of the authority 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.
In the result, the appeal of the assessee is allowed.