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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI VIKAS AWASTHY & SHRI AMARJIT SINGH
आदेश / O R D E R
PER AMARJIT SINGH, AM:
The present appeal filed by the assessee is directed against the order passed by the CIT(A) NFAC, Delhi, which in turn arises from the order passed by the A.O. u/s 154 of the Income Tax Act, 1961 for A.Y. 2018-19. The assessee has assailed the impugned order on the following grounds before us:
M/s Flag Security Services Vs. ITO, Ward 23(1)-3 “1. That the appellant denies its liability to be assessed at total income of Rs.61,30,389/- as against returned income of Rs. 43,77,584/- and accordingly denies its liability to pay tax, cess and interest demand here on.
2. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. DCIT CPC in making adjustments under Section 143(i)(a) of the Income Tax Act, 1961 by disallowing the contribution received from employees towards ESI and EPF amounting to Rs. 17,52,805/- with complete disregards to the Decision of Jurisdictional Honorable Bombay High Court in the case of Ghatge Patil Transports Limited [2014] 368 ITR 749/[2015] 228 Taxman 340/53 taxmann.com 141 (Bom.) as the payments have been made before due date specified u/s 139(1) and as such are fully allowable. In view of the provisions of section 2(24)(x) read with section 36(1)(va) & section 436 of the Income Tax Act, 1961, being late deposit of employees contribution towards ESIC/EPF which has been duly deposited on or before the due date of filing of return of income as per the provisions under section 139(1) of The Income Tax Act 1961, employee contribution towards ESI and PF paid after due date of respective statue but before the filling of Income Tax return due date as per section 139 (i) are allowable expenses and cannot be disallowed under section 36 (l)(va). But the Ld. DCIT (CPC) without appreciating the legal position and facts of the case made the above mentioned addition and the Appellant preferred an appeal before the Hon'ble CIT (A), Mumbai against said order. And then order has been passed by CIT(A), National Faceless Appeal Centre, Delhi. The Hon'ble CIT (A) NFAC also confirmed the above said addition of Rs.17,52,805/- and passed the order against the Appellant on 17.09.2021.
The appellant craves leave to add, alter, rescind or amend any of the above grounds of appeal.”
The fact in brief is that return of income was filed on 30.09.2018 declaring total income at Rs.43,77,584/-. The return was processed u/s 143(1) at the CPC, Banglore, and adjustment of Rs.17,52,805/- was made to the return of income on account of income u/s 36(1)(va) r.w.s 2(24)(x) of the Act for late deposits of employees contribution to PF & ESI beyond the due date as prescribed in the relevant Act. The request for rectification dated 16.12.2019 was rejected by the A.O, CPC u/s 154 of the Act vide order dated 17.12.2019.
3. Aggrieved, the assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee holding that M/s Flag Security Services Vs. ITO, Ward 23(1)-3 Explanation 2 to Sec. 36(1)(va) has been inserted to clarify that the provisions of Sec. 43B shall not apply for the purpose of determining the due date. The ld. CIT(A) also stated that the aforesaid amendment take effect from 01.04.2021 that it would have retrospective effect in view of the proposed deeming provisions.
During the course of the appellate proceedings before us the ld. counsel contended that amended law cannot be applied retrospectively. The ld. Counsel has also submitted legal paper book comprising judicial pronouncements in support of his claim. The Ld. Counsel also submitted that prior to the amendment in the Finance Act, 2021, the Hon'ble jurisdictional High Court in the case of CIT vs. Hindustan Organic Chemicals Ltd (2014) 366 ITR 1 (Bom); held that where assessee company made payment of employees' contribution towards Provident Fund, assessee’s claim could not be disallowed on account of delayed payment in view of amendment to section 43B of the Act. The Ld. Counsel has also placed reliance on decision of Ghatgepatil Transport Ltd (2014) 368 ITR 249 (Bom) wherein it is held that section 43B of the Act is applicable to both employees and employers’ contribution.
On the other hand, the Ld. DR has supported the orders of lower authorities.
Heard both the sides and perused the materials on record. The assessee has deposited employees contribution to Provident Fund after due date specified in the Provident Fund Act, but before the due date of filing the return of income as prescribed under section 139(1) of the Act. We have perused the decision of Honourable jurisdictional High Court in the case of Hindustan Organic Chemicals Ltd wherein it is held that assessee claim towards employees contribution to Provident Fund could
M/s Flag Security Services Vs. ITO, Ward 23(1)-3 not be disallowed on account of delayed payment in view of amendment to Section 43B of the Act. The Hon'ble jurisdictional High Court in the case of Ghatge Patil Transport Ltd, held that both employer and employees' contribution are covered under amendment to section 43B and judgement of Hon’ble Supreme Court in CIT vs. Alom Extrusions Ltd (2009) 319 ITRE 306 holding that payment made was subject to benefit of section 43B. We have also gone through the decision of ITAT Chennai in the case of Adhyar Ananda Bhavan Sweets India P. Ltd Chennai vide (2022) 134 taxmann.com 56 wherein held that the amendment made to section 36(i)(va) of the Act by inserting Explanation 2 r.w.s 43B in prospective in nature and would be applicable from assessment year 2021-22.
In the case of the assessee, it had remitted the employees' contribution towards Provident Fund beyond the due date as specified in the Provident Fund Act, but within the due date for filing the return of income, therefore, following the aforesaid decisions, we are of the considered opinion that the ld. CIT(A) is not justified in disallowing the claim of deduction of assessee. Accordingly, we decide this issue in favour of the assessee and disallowance made by the Assessing Officer is deleted.
In the result, the appeal of the assessee is dismissed. Order pronounced in the open court on 22.04.2022