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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI M. BALAGANESH, AM & MS. KAVITHA RAJAGOPAL, JM
The present appeals had been filed by the assessee against the order passed by the learned Commissioner of Income Tax (Appeals) (‘ld.CIT(A) for short), National Faceless Appeal Centre, as against the order passed by the Assessing Officer (A.O. for short) for the Assessment Years 2017-18 and 2019-20, disallowing the Employee’s Contributions Fund (EPF) due to the delayed deposit of the same after due date prescribed under the relevant Acts. As both the captioned appeals have similar facts, we hereby decide this by a consolidated order taking as lead case.
The brief facts of the appeal is that the assessee is a Private Limited Company and during the A.Y. 2017-18 filed its return of income declaring total income of Rs.1,73,91,110/-. An intimation u/s.143(1) of the Income Tax Act, 1961 (‘the Act'
2 & 1444/Mum/2021 (A.Ys.17-18 & 19-20) One Point One Solutions Limited vs. CIT(Appeals) hereinafter) dated 11.12.2019 was issued by CPC making addition of Rs.1,85,92,583/- u/s. 36(1)(va) of the Act. The impugned addition was made as disallowance of sum received from employees as contribution to PF/Superannuation Fund for the welfare of the employee which was deposited after the due date prescribed under the relevant Act but before the due date of filing of returns u/s.139(1). The assessee’s total income chargeable to tax was calculated at Rs.3,59,83,700/-, as against Rs.1,73,91,110/- computed in the return of income by CPC as per intimation u/s.143(1).
Aggrieved by the impugned order the assessee filed an appeal before the ld. CIT(A), NFAC who then confirmed the A.O.’s order.
The assessee is in appeal before us as against the impugned order of the lower authorities. During the appellate proceedings, the ld. AR contended that the ld. CIT(A) has failed to consider the binding precedent of the jurisdictional high court in the case of CIT vs. Ghatge Patil Transport Ltd. [2014] 368 ITR 749 (Bom), where on similar facts, the Hon'ble Bombay High Court has reiterated the proposition that employee’s contribution to provident fund which was deposited after the due date prescribed under the relevant Act but paid before the due date of filing of return should be allowed u/s.36(1)(va).
The ld. Departmental Representative (ld. DR for short), on the other hand, relied on the decision of the lower authorities.
Having heard the learned representatives and perused the materials available on record, it is evident that there has been a delay in the deposit of Rs.1,85,92,581/- which was paid after the due date under PF/ESIC Act but nevertheless the said amount was paid before the due date of filing of return of income u/s.139(1). The assessee has also submitted details regarding the payment of the said amount along with tax audit report before the lower authorities.
3 & 1444/Mum/2021 (A.Ys.17-18 & 19-20) One Point One Solutions Limited vs. CIT(Appeals) 7. It is pertinent to point out that the assessee has stated that the lower authorities have failed to consider the jurisdictional high court decision which is in favour of the assessee and the ld. CIT(A) has instead considered the decision of the Hon’ble Gujarat High Court in the case of CIT vs. Gujarat State Road Transport Corporation [2014] 366 ITR 170 (Guj). The assessee has also relied upon the decision of the Hon’ble Apex Court in the case of Alom Extrusions Case [2009] 319 ITR 306 (SC), which was contended by the ld. CIT(A) as applicable only for disallowance u/s.43B of the Act and not for section 36(1)(va) of the Act brought about in the Finance Bill 2021, where explanation to Sec 36(1)(va) has stated that employee’s contribution to PF/ESIC will be disallowed if the same is not deposited before the specified due date.
Having considered the same, we are of the opinion that the said amendment is only prospective in nature and will take effect from 1st April, 2021, thereby applicable to A.Y. 2021-22 onwards. Furthermore, various high courts have held that the employee’s contribution u/s.36(1)(va) of the Act will also be covered under the section 43B of the Act and the present case in hand will squarely be covered under the decision in CIT vs. Alom Extrusions Ltd. (supra). The present appeal pertains to A.Y. 2017-18 and does not come under the perview of the clarifactory memorandum to the Finance Act, 2021 with regard amendment to section 36(1)(va) and section 43B. From the above observation, we are of the view that the impugned addition made u/s.36(1)(va) of the Act in both the assessment year deserves to be deleted.
From the above facts and circumstances, the addition made by adjustment while processing the return of income u/s. 143(1) for Rs.1,85,92,583/- by the CPC pertaining to the deposit of employees contribution towards PF/ESIC paid after the due date prescribed by the relevant Act but before the due date of filing of return of income u/s. 139(1) of the Act is hereby directed to be deleted, as it cannot be disallowed considering the binding precedent of Hon’ble Bombay High Court.
In the result, the appeal filed by the assessee (in A.Y. 2017-18) is allowed in terms of the above said observations.
The order passed in ITA No. 1444/Mum/2021.
In the result, the appeal filed by the assessee (in for A.Y. 2019-20) is allowed in terms of the above said observations.
Order pronounced in the open court on 28.04.2022.