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Income Tax Appellate Tribunal, MUMBAI BENCH “C”, MUMBAI
Before: SHRI KULDIP SINGH & SHRI OM PRAKASH KANT
O R D E R
Per : Kuldip Singh, Judicial Member:
The appellant, Mr. Chandrahas Mundappa Rai (hereinafter referred to as ‘the assessee’) by filing the present appeal, sought to set aside the impugned order dated 08.07.2021 passed by Commissioner of Income Tax (Appeals), NFAC, Delhi [hereinafter referred to as the CIT(A)] qua the assessment year 2018-19 on the grounds inter alia that :-
“1. Under the facts and circumstances of the case and in law, Assessing officer has erred in making an addition of
2. Under the facts and circumstances of the case and in law, AO has erred in not appreciating the fact that the said sum of Rs.16,48,759/- is fully paid and discharged his liability before due date of Filing of Return.
Under the facts and circumstances of the case and in law, AO has disallowed the claim and thereby has misconceived the fact and as such addition made by the AO being devoid of facts and being based on pure guesses deserves to be deleted.
Relief Claimed:
The addition made by the AO amounting to Rs.16,48,759/- u/s. 36(l)(va) of the Act being the late payment of Employees Contribution towards PF & ESIC should be deleted in view of various favorable pronouncements made by the Jurisdictional Bombay High Court in case of CIT vs Ghatge Patil Transport Ltd. (2015)(53 Taxmann.com 141) and CIT vs Hindustan Organics Chemicals Ltd. (2014)(48 Taxmann.com 421) and also by the Supreme Court in the case of CIT vs Alom Extrusions Ltd. (2009)(185 Taxman416 (SC).
The appellant craves right to add, amend, alter, modify or substitute any 7 all grounds of appeal at the time of hearing.”
Briefly stated facts necessary for adjudication of the controversy at hand are : assessee being an individual e-filed the return of income for the year under assessment 2018-19 on 30.10.2018 declaring total income of Rs.94,09,610/-, which was processed under section 143(1) of the Income Tax Act, 1961 (for short ‘the Act’) at the total income of Rs.1,10,58,370/- by making payment of PF/ESI under section 36(1)(va) of the Act.
3. Assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has dismissed the same. Feeling aggrieved with the impugned order passed by the Ld. CIT(A) assessee has come up before the Tribunal by way of filing the present appeal.
We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.
Undisputedly, the assessee has not deposited provident fund and ESI within due date as per PF & ESI Act. It is also not in dispute that the assessee has deposited the provident fund and ESI before the due date of filing the return of income. It is settled principle of law that amendment made in the relevant provisions by Finance Act, 2021 in the provisions contained under section 36(1)(va) of the Act by inserting explanation 2 as well as section 43B of the Act was held to be prospective as decided by the co- ordinate Bench of the Tribunal in case of Indian Geotechnical following findings:
14. Therefore, the amended provisions of Section 43B as well as 36(1 )(va) are not applicable for the assessment year under consideration. By following the binding decision of Hon'ble Jurisdictional High Court, the employees contribution paid by the assessee before the due date of filing of return of income u/s. 139(1) is an allowable deduction. Accordingly, we decide this issue in favour of the assessee and the disallowance made by the Assessing Officer is deleted.
Co-ordinate Bench of the Tribunal in case of M/s. High Volt Electricals Pvt. Ltd. vs. ACIT in order dated 26.09.2018 decided this identical issue in favour of the assessee by returning following findings:
“7. We have heard the authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record. We find that our indulgence in the present appeal has been sought by the assessee, for adjudicating, as to whether in the backdrop of the post-amended Sec. 43B of the Act, the lower authorities were justified in disallowing the amount of the employees contribution to provident fund that was deposited by the assessee beyond the stipulated period contemplated under the Provident Fund act, but before the ‘due date’ of filing of its return of income under Sec. 139(1) of the Act. We find that it is an admitted fact, that though the assessee had deposited the employees contribution to provident fund beyond the time period allowed under the PF act, however, the said amounts were paid before the ‘due date’ of filing of the return of income by the assessee under Sec. 139(1) of the Act. We are unable to accept the observations of the lower authorities, that the provisions of Sec. 43B would not be applicable as regards the employees contribution to provident fund, and the same would continue to be governed by Sec. 36(1)(va) r.w.s. 2(24)(x) of the Act. We find that the issue under consideration is squarely covered by the judgment of the Hon’ble High Court of Bombay in 5 Mr. Chandrahas Mundappa Rai the case of CIT Central, Pune Vs. Ghatge Patil Transports Ltd. (ITA No. 1002 & 1034 of 2012; dated 14.10.2014) (Bom). The Hon’ble High Court in its aforesaid order had clearly observed that both employees and employers contribution would be covered under the amendment to Sec. 43B of the Act and the Alom Extrusions (supra) judgment. We thus, are of the considered view that the disallowance of Rs. 6,30,867/- upheld by the CIT(A), not being in conformity with the aforesaid judgment of the Hon’ble High Court cannot be sustained and is hereby vacated.”
In view of what has been discussed above and following the decision of co-ordinate Bench of the Tribunal in case of M/s. High Volt Electricals Pvt. Ltd. vs. ACIT (supra) which followed the decision rendered by Hon’ble Bombay High Court in case of CIT Central, Pune vs. CIT vs Ghatge Patil Transport Ltd., 1034 of 2013 dated 14.10.2013 (Bom.) that; “Both employers & employees contribution would be covered under amendment to section 43B of the Act”. So we are of the considered view that the disallowance made by the AO and sustained by the Ld. CIT(A) on account of not depositing the PF & ESI within specified period under the Act but before the date of filing of the return of income during the year under assessment is not sustainable in the eyes of law, hence ordered to be deleted. Resultantly, appeal filed by the assessee is hereby allowed.
Order pronounced in the open court on 29.03.2022.