LAURELS (INDIA) IMPEX (P) LTD.,NEW DELHI vs. ADIT, BENGLURU

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ITA 938/DEL/2021Status: DisposedITAT Delhi08 December 2021AY 2019-206 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal, following the Delhi High Court judgment in PCIT vs Pro Interactive Service (India) Pvt. Ltd., held that belated payment of employee's contribution to PF and ESI is allowable if paid before the due date of filing the return. The disallowance was directed to be deleted.

What were the facts?

The assessee challenged an addition of Rs. 11,42,844/- made on account of late deposit of employee's contribution to PF and ESI. The CIT(A) had dismissed the assessee's appeal, confirming the addition.

What were the issues?

Whether disallowance of employee's contribution to PF and ESI made due to late deposit is permissible when paid before the due date of filing the return.

Which sections of the Income-tax Act were involved?

Section 143(1)

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

Before: SHRI KUL BHARAT

For Appellant: Shri Shrey Jain, Adv
For Respondent: Shri Om Prakash, Sr. DR
Hearing: 08.12.2021Pronounced: 08.12.2021

ORDER PER KUL BHARAT, JM :

This appeal by the assessee is directed against the order of the Ld. CIT(A)- Delhi, National Faceless Appeal Centre (NFAC) dated19th May, 2021, pertaining to Assessment Year 2019-20.

The assessee has raised following grounds of appeal:-

“1. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. ADIT/CPC in making aggregate addition of Rs. 11,42,844/- on account of employee’s contribution to PF and ESI and that too by recording incorrect facts and findings and without observing the principles of natural justice and without appreciating the facts and circumstances of the case.

2. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. ADIT/CPC in making aggregate addition of Rs. 11,42,844/- on account of employee’s contribution to PF and ESI, is bad in law and against the facts and circumstances of the case and the same is not sustainable on various legal and factual ground.

3. That having regard to the facts and circumstances of the case, Ld. CIT(A) ought to have quashed the order u/s 143(1) passed by Ld. ADIT/CPC as the jurisdiction was not validly assumed as per law.

4. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. ADIT/CPC in making adjustment of Rs. 11,42,844/- u/s 143(1) which could not have been made in law.

2.

No one appeared on behalf of the assessee an application seeking adjournment has been filed. It is seen from the record that the assessee has challenged addition of Rs. 11,42,844/- made on account of late deposit Employees Contribution to PF & ESI as per respective Acts. Since the issue in question is covered by the Judgment of the Hon’ble Delhi High Court in favour of the assessee in the case of PCIT vs Pro Interactive Service (India) Pvt. Ltd. in [Del.] order dated 10.09.2018 , the appeal was taken up for hearing in the absence of the assessee.

3.

Facts of the case are that while processing the return of income. The Assessing Officer disallowed claim of Rs. 11,42,843/- on account of delay in deposit of Employees Contribution of PF & ESI as per the respective Acts.

4.

Aggrieved against this, the assessee preferred appeal before the Ld.CIT(A) who after considering the material placed before him dismissed the appeal and sustained the addition.

5.

Aggrieved against this, the assessee is in appeal before this Tribunal.

6.

Ld. DR supported the orders of the authorities below and relied on the judgment of the Hon’ble Delhi High Court in the case of CIT vs. Bharat Hotels Ltd. (2019) 410 ITR 417 (Hon'ble High Court).

7.

I have heard the Ld. DR and perused the material available on records. From the record, it is seen that before Ld.CIT (A), it was contended by the assessee that the Assessing Officer erred in disallowing Rs. 11,42,843/- on account of late deposition of Employees Contribution of Provident Fund and ESI which as per the judicial pronouncement rendered in the case of CIT Vs. A & Z Information Technology Pvt. Ltd. 318 ITR 123 (Karnataka), CIT Vs. Metropolio Fabrics Ltd. 350 ITR 327 (HP) and the judgment from Hon’ble Delhi High Court in the case of CIT Vs. AIMIL Ltd.229 CTR 448 are allowable to buttress the contention that the such contribution is allowable if the same is paid before the due date of filing of the return.

8.

I find that under the identical facts the Hon’ble Delhi High Court in the case of PCIT vs Pro Interactive Service (India) Pvt. Ltd. in [Del.] vide 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 binding precedents I hereby direct the Assessing Officer to delete the disallowance.

9.

The appeal of the assessee is allowed.

Above decision was pronounced on conclusion of Virtual Hearing in the presence of both the parties on 08th December, 2021

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