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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI V. DURGA RAO & SHRI G. MANJUNATHA
आदेश /O R D E R
PER G. MANJUNATHA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated 26.09.2022 and pertains to assessment year 2018-19.
:-2-: ITA. No:845/Chny/2022 2. The assessee has raised the following grounds of appeal: 1. “The order of the CIT (A), NFAC, Delhi is contrary to Law on the facts and in the circumstances of the case to that extent prejudicial to the interest of the assessee and at any rate is opposed to the principles of equity, natural justice and fair play.
2. The CIT (A), NFAC, Delhi has erred in confirming the order of the department u/s 143(1)(a)(ii) to disallow the claim of Rs.15,86,344/ towards EPF and ESI.
3. The CIT (A), NFAC, Delhi erred in disallowing the employee's contribution to EPF and ESI for the reason that the payment to the relevant fund were not made within the due date of the relevant statute.
4. The CIT (A), NFAC, Delhi failed to appreciate that the payment of employee's contribution to EPF and ESI within the due date of filing the return of income is an allowable expenditure.
5. The CIT (A), NFAC, Delhi ought to have seen that the amendment in section 36 (1) (va) takes effect only from 01.04.2021 i.e., from the asst. year 2021-22 and not to any previous years and moreover, this amendment takes effect only prospectively and not retrospectively.
6. For these grounds and such other grounds that may be urged before or during the hearing of the appeal, it is prayed that the order of the CIT (A), NFAC, Delhi be set aside and the relief sought by your Appellant be granted and render justice.”
3. The brief facts of the case are that, the assessee is a partnership firm engaged in the business of manufacturing of plastic products. The appellant had filed its return of income for assessment year 2018-19 on 29.09.2018, declaring a total income of Rs. 40,72,168/-. The DCIT (CPC), Bengaluru processed return of income filed by the assessee and issued :-3-: ITA. No:845/Chny/2022 intimation u/s. 143(1) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) on 03.09.2019 and determined total income of Rs. 56,58,512/-, by making addition towards disallowance of belated payment of employees’ contribution of ESI and PF u/s. 36(1)(va) r.w.s. 2(24)(x) of the Act. The assessee carried the matter in appeal before the first appellant authority, but could not succeed. The Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, vide their order dated 26.09.2022 dismissed the appeal filed by the assessee. Aggrieved by the Ld. CIT(A), the assessee is in appeal before us.
We have heard both the parties, perused materials available on record and gone through orders of the authorities below. The Ld. Counsel for the assessee referring to the decision of the ITAT, Cuttack Bench in the case of Nirakar Security & Consultancy Services Pvt. Ltd vs ITO in submitted that the Tribunal after considering the latest decision of Hon’ble Supreme Court in the case of Checkmate Services Pvt Ltd vs CIT in Civil Appeal No. 2833 of 2016 dated 12.10.2022, has set aside the issue and directed the AO to examine the allowability of expenditure u/s. 37(1) of :-4-: ITA. No:845/Chny/2022 the Act and thus, the issue may be set aside to the file of the AO. The Ld. DR on the other hand supporting the order of the Ld. CIT(A), submitted that the issue has been resolved by the Hon’ble Supreme Court and held that belated payment of employees’ contribution of ESI/PF under respective Act is assessable as income in terms of section 36(1)(va) r.w.s. 2(24)(x) of the Act, and thus, there is no reason to set aside the appeal filed by the assessee. We find that the Hon’ble Supreme Court in the case of Checkmate Services Pvt Ltd vs CIT, (supra), has considered an identical issue and held that if the employees’ contribution to PF & ESI has been paid beyond the time prescribed under the relevant Act, then same is not allowable u/s. 43B of the Act, even after the payment has been made before the due date of filing return of income under the Income-tax Act. It was further held that such sum will be treated as income of the assessee in terms of section 36(1)(va) r.w.s. 2(24)(x) of the Act. Therefore, by respectfully following the Hon’ble Supreme Court decision in the case of Checkmate Services Pvt Ltd vs CIT, (Supra), we are inclined to uphold the findings of the Ld. CIT(A) and dismiss the appeal filed by the assessee.
:-5-: ITA. No:845/Chny/2022 5. In the result, appeal filed by the assessee is dismissed.