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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 2019-20 is directed against the order of Ld. CIT(A), National Faceless Appeal Centre (“NFAC”) dated 14.10.2021.
The assessee has raised following grounds of appeal:-
1. “1. THAT in the present case, employees' contribution Rs.3,95,788=00 towards ESIC and EPF having been paid by the appellant employer before the date of filing of return of income u/s. 139[1] for the present period, such amount could not be added back in the income of the appellant
declared in the return of income filed. This addition is against the well settled law on the subject. 2. THAT the disallowance of deduction as has been made in the present case could not be made by way of intimation u/s. 143[1][a] of the I T Act, 1961. Such a disallowance could be made only after providing an opportunity to the assessee to establish its claim. 3. THAT the appellant craves leave to add, amend, revise, modify, substitute or delete any or all grounds of appeal or/and prayer made.
4. PRAYER: IN VIEW OF THE ABOVE, it is, therefore, prayed that the impugned assessment order as well appeal order disallowing deduction to the amount of Rs.3,95,788=00 being illegal, arbitrary, beyond jurisdiction and in utter disregards of the true facts and in the circumstances of the case may kindly be quashed in the interest of justice and fair play.”
Facts giving rise to the present appeal are that Central Processing Centre (“CPC”), Bengaluru vide intimation u/s 143(1) of the Income Tax Act, 1961 (“the Act”) for Assessment Year 2019-20 made adjustment regarding delay in deposit of employees contribution to PF & 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 Ld. Representatives of both the parties 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 Page | 3
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.