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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI PRASHANT MAHARSHI & KAVITHA RAJAGOPAL
ORDER Per Kavitha Rajagopal (JM):
This appeal has been filed by the Assessee as against the order of Ld.CIT(A), National Faceless Appeal Centre (NFAC), Delhi dated 17/12/2021 under section 250 of the I.T. Act, 1961 pertaining to assessment year 2018-19. The grounds of appeal are as follows:- “Ground 1. The learned Commissioner of Income-tax (Appeals) has erred in not considering in his order ground no. 1 of Form 35 being disallowance under section 43B of Rs. 1044320 despite the payments being made before due date of filing of return and proof submitted thereof. Ground 2. The learned Commissioner of Income-tax (Appeals) has erred in:- a. holding that the employee's contribution for PF and ESI of Rs. 581314 are allowable as deduction only when deposited by the employer within the due dates prescribed under relevant Act or funds; b. holding that for the relevant year, the provisions of section 43B of the Act were not applicable to the employees share of contribution of the ESI & PF. c. holding that Section 43B apply; only to employer's contribution,, d. Holding that, the amendments to Section 36(1 j(va) and Section 43B brought in by Finance Act, 2021 are retrospective and clarificatory in nature and hence the amendment is applicable for this year.
3. Without prejudice to the above, the learned Commissioner of Income-tax (Appeals) 11 has erred in confirming the adjustment u/s 143(1)(a) as done by CPC under section 43B and section 36(1)(va) as done by CPC under section 43B and section 36(1)(va) of Rs. 1625634. The adjustment done by the CPC in the intimation being beyond the purview of section 143 (l)(a) and the adjustment being not prima facie adjustment should have been deleted by the Commissioner of Income-tax (Appeals)- 11, Instead, the learned Commissioner of Income-tax (Appeals), has erred in holding the adjustment to be in order.”
2. The brief facts of the case are that the assessee is a domestic company engaged in the business of manufacturing engineering products. The assessee filed its return of income on 01/10/2018 declaring total income of Rs.33,45,453/-. In the intimation processed under section 143(1)(a), the Assessing Officer, CPC made an adjustment of Rs.10,44,320/-under section 43B and u/s 36(1)(va) being delayed deposit of employees’ contribution to PF & ESIC of Rs.5,81,314/-. On appeal, the Ld.CIT(A) confirmed the same. Further aggrieved, the assessee is in appeal before this Tribunal.
In ground 1 the assessee is aggrieved that the Ld.CIT(A) has erred in not considering ground 1 of Form 35 pertaining to disallowance under section 43B of Rs.10,44,320/- despite the payments being made before due date of filing of return of income under section 139(1) and the proof of which was submitted by the assessee. Before, the Ld.CIT(A), the assessee had stated that there was an error in form 3CA CD of the assessee wherein the amounts specified under section 43B were wrongly mentioned in 26(i)(B)(b) of Form 3CD instead of mentioning the same in 26(i)(B)(a), which was paid before the due date of filing the returns under section 139(1) of the I.T. Act, 1961. The assessee submitted that the same was clarified on the e-filing site to the proposed adjustment under section 143(1)(a) mentioning the error crept in form 3CA CD. It was further stated that revised form 3CA CD has also been filed to support the assessee’s case alongwith payment challans of 43B payments and revised forms form 3CA CD. The assessee contends that this ground of appeal
was not decided by the Ld.CIT(A). In our considered opinion, we deem it fit to set aside this ground of appeal to the file of the Ld.CIT(A) to adjudicate the ground of the assessee. This ground is treated as allowed, for statistical purpose.
4. With regard to the other grounds, the Ld.AR for the assessee contended that the impugned amount was deposited before the due date for filing the return of income and relied upon various judgements including jurisdictional Hon’ble Bombay High Court in CIT vs Ghatge Patil Transport Ltd (2014) 368 ITR 749 (Bom) and the decision of the Hon’ble Apex Court in CIT vs Alom Extrusions Ltd (2009) 319 ITR 306 (SC).
5. The Ld.DR, on the other hand, alleged that the said amount should have been deposited before the due date specified under the relevant Acts and that section 43B was applicable to employer’s contribution and not to employees’ contribution. For this proposition, the Ld.DR relied on the decision of Hon’ble Gujarat High Court in the case of CIT vs Gujarat State Road Transport Corporation (2014) 41 taxmann.com 100 (Guj) and Kerala High Court judgement in the case of Popular Vehicles & Services (P) Ltd vs CIT (2018) 96 taxmann.com 13 (Kerala).
7. Having heard the rival submissions and perused the materials placed before us, we are of the considered opinion that the issue relating to delayed deposit of EPF / ESI has already been dealt with by various Hon’ble High Courts including the jurisdictional Hon’ble Bombay High Court in CIT vs Ghatge Patil Transport Ltd (2014) 368 ITR 749 (Bom) wherein it was held that the decision of the Hon’ble Apex Court in CIT vs Alom Extrusions Ltd (2009) 319 ITR 306 (SC) that the amendment to section 43B of I.T. Act was applicable to both employer’s as well as employees’ contribution. Furthermore, the amendment brought out in the Finance Act, 2021 was only prospective and not retrospective thereby was applicable only to assessment year 2021-22 onwards and to subsequent years. The same has been reiterated by the decision of various Benches of the Tribunal.
8. We have also considered the decision of the co-ordinate bench in the caswe of Kalpesh Synthetics Pvt Ltd in dated April 27, 2022 wherein it has been held as under:- “........In our considered view, it cannot be open to the Assessing Officer CPC to take a view contrary to the view taken by the Hon’ble jurisdictional High Court – more so, when his attention was specifically invited to the binding judicial precedents in this regard. For this reason also, the inputs in question in the tax audit report can not be reason enough to make the impugned disallowance. The assessee must succeed for this reason as well.”
Therefore, following the above judicial precedents, we are of the considered opinion that the contribution towards EPF / ESI paid after the specified due date under the relevant Acts, but nevertheless paid before the due date of filing of the return of income under section 139(1) of the Act, is allowable. The Assessing Officer is directed to allow the deduction as claimed. Appeal of the assessee succeeds.
In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open Court on 29th July, 2022.