NISARG ENTERPRISE PVT. LTD.,AHMEDABAD vs. THE INCOME TAX OFFICER, WARD-3(1)(1), AHMEDABAD

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ITA 3131/AHD/2016Status: DisposedITAT Ahmedabad10 May 2018AY 2013-143 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that if ESI contributions are not deposited within the time limit provided in the relevant Acts, the deduction will not be admissible. The AO and CIT(A) correctly disallowed the deduction based on this principle.

What were the facts?

The assessee claimed deduction for employee's ESI contribution. However, the contribution was deposited after the due date prescribed under Section 36(1)(va) of the Income Tax Act. The AO disallowed the deduction, which was upheld by the CIT(A).

What were the issues?

Whether delayed deposit of employee's ESI contribution beyond the prescribed due date makes the deduction inadmissible. Whether interest under Section 234D is leviable.

Which sections of the Income-tax Act were involved?

Section 36(1)(va),Section 2(24)(x),Section 234D

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BENCH ‘SMC’

Before: SHRI RAJPAL YADAV

For Appellant: Shri Nishit Shah, AR
For Respondent: Shri James Kurian, Sr.DR
Hearing: 25/04/2018Pronounced: 10/05/2018

आयकर अपील�य अ�धकरण, अहमदाबाद �यायपीठ - अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL BENCH ‘SMC’ BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER

आयकर अपील सं./ ITA No.3131/Ahd/2016 �नधा�रण वष�/Asstt. Year: 2013-14 Nisarg Enterprise P.Ltd. Vs. The CIT(A)-9 3601/3602, GIDC Phase – IV Ahmedabad. Trikampura, Ahmedabad. PAN : AAACN 8527 E

अपीलाथ�/ (Appellant) �त् यथ�/ (Respondent)

Assessee by : Shri Nishit Shah, AR Revenue by : Shri James Kurian, Sr.DR

सुनवाई क� तार�ख/Date of Hearing : 25/04/2018 घोषणा क� तार�ख /Date of Pronouncement: 10/05/2018 आदेश/O R D E R Assessee is in appeal before the Tribunal against order of ld.CIT(A)-9, Ahmedabad passed for the Asstt.Year 2013-14.

2.

Issue raised in ground no.1 and 2 is that the ld.CIT(A) has erred in confirming addition of Rs.2,42,990/- under section 36(i)(va) r.w.s. 2(24)(x) of the Act due to delayed payment of ESI received from the employees.

3.

In the return of income filed by the assessee-company for the Asstt.Year 2013-14, the assessee has claimed deduction of employees’ contribution of Rs.2,42,990/- under the Employees’ State Insurance Act. This contribution of the assessee was to be deposited for the credit of the concerned employees with Government under the relevant fund on or before the due date prescribed under section 36(1)(va) of the Act. However, the AO noticed that the assessee has deposited the sum after

ITA No.3131/Ahd/2016 2 the prescribed due date. The AO issued a show cause notice to explain as to why delayed payment of ESI contribution should not be disallowed. The assessee explained that due to certain glitches in online system, challan could not be generated in time, and therefore, the delay was occurred. This contention of the assessee was rejected by the AO on the ground that the said sum has to be deposited in the credit of employees within the ‘due date’ stipulated in relevant Act and not before due date of filing of return, and therefore, the AO treated the same as income of the assessee and added to its total income. This action of the AO was confirmed by the ld.CIT(A).

4.

Before me, the ld.counsel for the assessee reiterated contentions as were made before the Revenue authorities, whereas the ld.DR relied upon order of Revenue authorities.

5.

I have considered rival contentions and gone through the record. The AO has disallowed deduction of ESI PF contribution under section 36(1)(va) of the Income Tax Act, 1961. The ld.CIT(A) has upheld the disallowance by following decision of the Hon’ble Gujarat High Court in the case of CIT Vs. Gujarat State Road Transportation Corporation (supra). The ld.counsel for the assessee did not dispute about proposition that the Hon’ble Gujarat High Court has decided this issue against the assessee. Considering the Hon’ble High Court’s judgment, if social welfare fund like ESI contributions are not deposited within time limit provided in the relevant Acts, then deduction will not be admissible to the assessee. I find that the Revenue authorities have considered this aspects in detail, and do not call for any interference in their orders. Accordingly I reject these two grounds of appeal.

6.

So far as ground no.3 regarding charging of interest under section 234D is concerned, we do not find any merit in this ground, because section 234D is a mandatory provision, by which assessee is liable to

ITA No.3131/Ahd/2016 3 pay interest on the excess refund received by the assessee, if any, from the Department. This ground is accordingly disposed of.

7.

In the result, appeal of the assessee is dismissed. Order pronounced in the Court on 10th May, 2018 at Ahmedabad.

Sd/- (RAJPAL YADAV) JUDICIAL MEMBER Ahmedabad; Dated 10/05/2018

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