INTELLIGENT COMMUNICATION SYSTEM INDIA LIMITED,DELHI vs. ITO,WARD-12(1), DELHI

The assessee has filed the appeal against the order of the Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [“Ld. CIT(A)”, for short] dated 30.09.2024 for the Assessment Year 2017-18 raising following grounds of appeal :- “On the fact and circumstances of the case and in law the ld. NFAC has erred in confirming the disallowance of the Rs.1,38,75,883/- under section 36(1)(va) of the Income Tax Act. The action of the Ld. National Faceless Appeal Centre (NFAC) and Ld. Centralized Processing Centre (CPC) is wrong, misconceived and unjustified therefore it should be quashed.”

On the other hand, ld. DR of the Revenue relied on the orders of the lower authorities.

Considered the rival submissions and material placed on record. We observe that the coordinate Bench in the case of the assessee in for AY 2018-19 vide order dated 03.08.2023 remitted the matter back to the Assessing Officer by observing as under :- “5. The issue towards taxability of belated employees’ contribution to Provident Fund/ESIC is no longer res integra in the light of the judgment of the Hon’ble Supreme Court in the case of Checkmate Services (P.) Ltd. vs. CIT (supra). The Co-ordinate Bench of the Tribunal in Cemetile Industries vs. ITO (supra) had expressed a view that such adjustment/disallowance is also permissible in the proceedings carried out under Section 143(1) of the Act. Very recently, the Co-ordinate Bench of the Tribunal in Savleen Kaur & Others vs. ITO in & Others for Assessment Year 2018-19 & Others vide order dated 09.01.2023 has also taken a similar view and upheld the action of the Revenue. In parity with the view taken by Co- ordinate Benches, we do not see any merit in the appeal of the assessee on first principles.

The Co-ordinate Bench of Tribunal in the case of Sentinel Consultants Pvt. Ltd. vs. ACIT & 8/Del/2023 order dated 12.06.2023 observed in para no.9.3 of that order that month during which the disbursement of salary is actually made would be relevant for the purposes of determination of due date. The relevant operative para of the order of the Co-ordinate Bench of Tribunal is reproduced herein under for ready reference: “9.3 We also take note of yet another plea made out on behalf the assessee towards methodology of calculation of default under the relevant PF/ESIC Act. The Ld. Counsel contends that the month during which the disbursement of salary is actually made would be relevant for the purposes of determination of due date of deposit under the respective statute. The accrual of liability towards payment of salary without actual disbursement would not fasten obligation for deposits of employees contribution in the labour Acts per se. as observed by the co-ordinate bench in Kanoi Paper and Industries Ltd. vs. ACIT (2002) 75 TTJ 448 (Cal). This aspect has not been found to be examined by the Assessing Officer or CIT(A). Hence without expressing any opinion on merits on this aspect, we deem it expedient to restore the matter to the file of designated AO. It shall be open to the assessee to place factual matrix before the AO and take such plea for evaluation of the AO. The AO shall examine this aspect and fresh order in accordance with law after giving proper opportunity.”

The observations made in Sentinel Consultants Pvt. Ltd. shall apply mutatis mutandis. Consequently, we consider it expedient to restore the issue back to the file of AO for factual verification and redetermination in the issue on the light of determination made by the Co-ordinate Bench in the case of Kanoi Paper and Industries Ltd. (supra). The AO shall thus recompute the amount of disallowance under Section 36(i)(va) of the Act, if any, on the above basis, in accordance with law. The assessee shall be entitled to appropriate relief under Section 36(i)(va) of the Act where it is found that deposits have been made towards PF/ESIC within the due date from the close of month of actual disbursement of salary/wages in the light of interpretation rendered in the case of Kanoi Paper and Industries Ltd. (supra).

In the result, appeal of the assessee is allowed ex parte for statistical purposes.”

Respectfully following the aforesaid order of the coordinate Bench, we remit the file to the Assessing Officer and direct to decide the issues as per the directions given by the coordinate Bench in assessee’s own case for Assessment Year 2018-19 as above. In the result, the appeal filed by the assessee is allowed for statistical purposes.