AGAPPE DIAGNOSTICS LTD,MUNBAI vs. DCIT CIR 1(1) (1) , MUMBAI

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.

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