RAHUL KAPOOR,NEW DELHI vs. ASSESSING OFFICER, WARD 49(1), DELHI

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ITA 1656/DEL/2021Status: DisposedITAT Delhi24 February 2022AY 2018-20195 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 issue is covered by the Delhi High Court judgment in PCIT vs Pro Interactive Service (India) Pvt.Ltd. The legislative intent is to allow expenditure when payment is actually made, not to treat belated payments as deemed income.

What were the facts?

The assessee claimed expenses for employees' contribution to PF and ESI. The Assessing Officer made an addition on account of late deposit of these contributions. The CIT(A) confirmed the addition.

What were the issues?

Whether late deposit of employees' contribution towards provident fund and ESI fund, paid before the due date of filing the return, qualifies for deduction under Section 43B of the Income Tax Act.

Which sections of the Income-tax Act were involved?

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 Appellant: Shri S.S.Katyal, CA
For Respondent: Shri Sanjay Kumar, Sr.DR
Hearing: 24.02.2022Pronounced: 24.02.2022

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 15.09.2021.

2.

The assessee has raised following grounds of appeal:-

1. “On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts. Page | 1

2. On the facts and circumstances of the case, learned CIT(A) has erred both on facts and in law in passing the order without providing reasonable opportunity of being heard to the assessee in clear violation of principle of natural justice.

3. On the facts and circumstances of the case, learned CIT(A) has erred both on facts and in law in confirming the addition of Rs.24,10,198/- made by the AO(CPC) on account of late deposit of employees' contribution towards provident fund and ESI Fund 4. That the above disallowance has been confirmed ignoring the contention of the assessee that employees' contribution towards provident fund and ESI Fundwould qualify for deduction even if paid after due date prescribed under Provident Fund Act and ESI Act but before due date of filing of return in view of section 43B of the Income Tax Act. 5. On the facts and circumstances of the case, learned CIT(A) has erred both on facts and in law in confirming the addition ignoring the various judicial pronouncements brought on record by the assessee in this regard. 6. The Appellant craves leave to alter, amend and/or withdraw all or any of the grounds of appeal herein or add any further grounds as may be considered necessary either before or during the appeal hearing.”

3.

Facts giving rise to the present appeal are that the assessee filed its return of income and Audit Report on 03.10.2018 showing total income of Rs.15,77,153/-. A notice u/s 143(1)(a) of the Income Tax Act, 1961 (“the Act”) was issued to the assessee on 19.01.2019. As per Revenue, the assessee claimed certain expenses that were paid after the due date of respective acts but in actual these expenses of EPF/ESIC contributions amounting to Rs.24,10,198/- was paid on or before the due date of filing of income tax return for previous year. Thereafter, Central Processing Centre (“CPC”), Bengaluru vide intimation u/s 143(1) of the Income Tax Act, 1961 (“the Act”) for Assessment Year 2018-19 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 Page | 3 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.

8.

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

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