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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM & SHRI RAHUL CHAUDHARY, JM
PER PRASHANT MAHARISHI, AM:
This appeal is filed by the assessee against the order passed by the National faceless appeal Centre (NFAC), Delhi (the learned CIT – A) for assessment year 2018 – 19 dated 26/8/2021 wherein the disallowance made by Central processing Centre (CPC) (the learned AO), Bangalore passed an intimation u/s 143 (1) of the income tax act, 1961 (the act) of disallowance of ₹ 898,343/– on account of delayed payment of employees contribution to the provident fund disallowable u/s 36 (1) (va) of the act was confirmed.
Assessee aggrieved has raised the following grounds of appeal:- a. The order passed by the learned Commissioner of appeals (CIT – A) to the extent appeal against is against law, equity and justice. b. The learned CIT – A order in confirming the adjustment made by the assessing officer while processing the return u/s 143 (1) of the act, of the amount of employee share of provident fund remitted beyond the due date specified in the respective act, but before the due date of filing of the return of income. The settled position of law is in favour of the appellant. The learned CIT – A ought to have appreciated that the amendment to provisions of Section 36 (1) (va) and Section 43B (b) in the finance act 2021 is only prospective and hence not applicable to the relevant assessment year c. the learned CIT – A grossly erred in holding that the assessing officer is empowered to make the above adjustment while processing the return of income u/s 143 (1) of the act, even though the said adjustment related to a debatable issue.
3. The brief facts show that assessee is a public limited company carrying on the business of manufacturing and trading of diagnostic reagents and machines. It filed its return of income on 30/11/2018 at a total income of ₹ 143,964,197/–. This return was revised on 28/3/2019 at ₹ 142,563,326/–.
4. The return of income was processed u/s 143 (1) of the act according to which employees contribution to the provident fund remitted beyond the due date specified in the respective statute but before the due date u/s 139 (1) of the act amounting to ₹ 898,343/– was disallowed. This adjustment was made in on 2 October 2019 u/s 143 (1) (iv) of the act holding that the ‘disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return.’ 5. Aggrieved with the intimation, assessee preferred appeal before National faceless appeal Centre [NFAC] where the appeal of the assessee was disposed of by order dated 26/8/2021 wherein it has been held that Central processing centre is within its statutory power to make such an adjustment as the audit report filed by the assessee has disallowed the impugned amount but appellant has claimed it by way of deduction in return of income against the audit report in the captioned assessment year. It was also held that provisions of Section 43B (b) applies only to employers contribution. Further reliance on the decision of the honourable Gujarat High Court in case of CIT versus Gujarat state Road transport Corporation (366 ITR 170) as well as amendment made by the finance act 2021 to Section 36 (1)(va) and Section 43B on the merits also the disallowance was confirmed. Therefore, assessee is in appeal before us.
The learned authorised representative referred to a paper book containing 30 pages wherein decisions of various judicial authorities were cited to support the case of the assessee that if the remittance of employees' share of provident fund contribution is made before the due date of filing of the return of income, no disallowance can be made.
The learned departmental representative vehemently supported the orders of the learned CIT – A and stated that if employees contribution paid before the due date of filing of the return of income but beyond the due dates prescribed in the respective provident fund laws, same cannot be allowed. He extensively referred to the order of the learned that CIT – A to show that amendment made by the finance act 2021 also clarifies the same and applies retrospectively.
We have carefully considered the rival contention and perused the orders of the lower authorities. The facts in the case clearly shows that the employee share of provident fund contribution for the month of may 2017 amounting to ₹ 898,343/– was remitted to the provident fund authority on 16/6/2017. The due date of remittance of the provident for the month of May 2017 earlier was up to 15/6/2017 however, the same was extended by a date and the due date under the respective provident fund law was extended up to 16/6/2017. This evidence is available at page number seven – 11 of the paper book which says that the last date for remittance for the due month of may 2017 is payable by 15/6/2017 is extended by one day i.e. extended up to 16/06/2017. Thereby it is apparent that when the assessee has deposited the above sum within that extended due date i.e. 16/6/2017, without going into the controversy whether the amendment made by the finance act 2021 is applicable retrospective or not, there is no delay in deposit of the employee’s contribution. In nutshell, the employee’s contribution has been deposited by the assessee within the due date prescribed under the respective provident fund laws. Thus, adjustment made by the Central processing centre is also not in accordance with the law. In view of this, we find that no disallowance can be made in the hands of the assessee. Accordingly, ground numbers 1 – 3 of the appeal are allowed.
In the result, appeal filed by the assessee is allowed
Order pronounced in the open court on 20.06.2022.