DY.CIT 13(2) (2) , MUMBAI vs. M/S. SAHAKAR GLOBAL LTD, MUMBAI

The solitary issue involved in this appeal is the deletion of addition made under section 36(1)(va) r.w.s. 2(24)(x) to the tune of R.3,57,95,555/- being employees’ contribution to Provident Fund and ESIC deposited after the due date prescribed in the PF & ESIC Act but before the due date for filing of returns of income.

The brief facts of the case are that the assessee company is engaged in the business of collection of toll, had filed its return of income declaring total income of Rs.20,72,16,320/-. The return of income was processed under section 143(1) of the I.T. Act at CPC, Bangalore. The impugned amount was disallowed under section 36(1)(va) r.w.s. 2(24)(x) of the I.T.Act on the pretext that the employees contribution to Provident Fund & ESIC was paid beyond the due dates prescribed under the relevant Act, but before filing of return of income under section 139(1). Aggrieved by the said order, the assessee was in appeal before Ld.CIT(A)-52, Mumbai, who deleted the disallowance by placing reliance on the decision of the Hon’ble jurisdictional High Court in CIT vs Ghatge Patil Transport Ltd (2014) 368 ITR 749 (Bom); CIT vs Hindustan Organic Chemicals Ltd of 2012(Bom) and the Apex Court decision in the case of Alom Extruions Ltd (2009) 319 ITR 306 (SC). The Revenue is in appeal before the Tribunal.

During the appellate proceedings before us, the Ld.DR vehemently argued that the Ld.CIT(A) has failed to consider the decisions of Hon’ble ITAT Vedvan Consultants Pvt Ltd 1312/Del/2022 and the Hon’ble Delhi High Court decision in the case of M/s Bharat Hotels Ltd (2019) 410 ITR 417 (Del). Further, he relied upon the order of Assessing Officer.

The Ld.AR, on the other hand, contended that the employees’ contribution to PF and ESIC was paid before the due date for filing of return and relied upon the judgement of the Hon’ble jurisdictional High Court in the case of CIT vs Ghatge Patil Transport Ltd (supra). Further to this, the Ld.AR stated that the assessee had toll plazas at various locations spread across the country and the employees do not sustain to the job for more than 9 – 12 months owing to the remote locations, which are mostly in rural areas where there are poor medical facilities. Due to this reason, the employees opposed for deduction of ESIC from their salaries and the same was in fact paid by the assessee in order to comply with the statutory provisions of ESIC Act. It was alleged that the said employees’ contribution was not deducted from the employees salary but was said to be paid by the assessee company itself. The Ld.AR relied upon the order of the Ld.CIT(A).

Having heard the rival submissions of the representatives and perused the materials on record, we observe that the employees contribution to PF & ESIC was paid beyond the due date prescribed under the relevant Acts but was paid before the due date for filing the return of income. Taking into consideration the facts of the case, 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.

We, therefore, are of the considered opinion that the addition made to the tune of Rs.3,57,95,555/- towards delayed deposit of employees’ contribution towards EPF / ESIC 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, was rightly deleted by the CIT(A).

In the result, the appeal of the Revenue is dismissed.