M/S. GORAKHNATH CONSTRUCTION PVT. LTD.,ROURKELA vs. ACIT, ROURKELA CIRCLE, ROURKELA

In ground No.2 of the appeal the grievance of the assessee is that the CIT(A) erred in confirming the disallowance for employees contribution to PF u/s.36(1)(va) of the Income Tax Act, 1961 of Rs.18,23,036/- and employees’ contribution to ESIC of Rs.3,35,035/-, aggregating to Rs.21,58,071/- on the ground that the same was not deposited within the due date prescribed under the respective Act.

Brief facts of the case are that the AO observed that the assessee has not deposited employees’ contribution to Provident Fund of Rs.18,23,036/- and employees’ contribution to ESIC of Rs.3,35,035/- aggregating to Rs.21,58,071/- within the due date prescribed under the respective Act, therefore, he added the same to the total income of the assessee u/s.36(1)(va) r.w.s.2(24)(x) of the Act.

On appeal the CIT(A) confirmed the action of AO by following the decision of Hon’ble Gujarat High Court in the case of CIT Vs. Gujarat State Road Transport Corporation [2014] 366 ITR 170 (Gujarat).

Before us, the AR of the assessee submitted that in view of the decision of Hon’ble Supreme Court in the case of Rajasthan State Beverages Corporation Ltd., [2017] 84 taxmann.com 185 (SC), no disallowance of deduction for employees’ contribution to PF & ESIC is to be made where the amount is deposited by the assessee within the time prescribed for filing return of income u/s.139(1) of the Act.

The DR could not controvert the above submission of the AR of the assessee.

After hearing rival submissions and perusing the material on record, we find that it is not in dispute that the assessee deposited employees’ contribution to Provident Fund of Rs.18,23,036/- and employees’ contribution to ESIC of Rs.3,35,035/- aggregating to Rs.21,58,071/- within the due date prescribed u/s.139(1) of the Act. The addition was made on the ground that the employees’ contribution to PF and ESIC was not deposited within the time prescribed under the P.F.Act. We find that no disallowance can be made for deduction of the same u/s.36(1)(va) r.w.s.2(24)(va) of the Act in view of the decision of Hon’ble Supreme Court in the case of Rajasthan State Beverages Corporation Ltd., [2017] 84 taxmann.com 185 (SC), where it was held as under :- “ Section 43B, read with section 36(1)(va), of the Income-tax Act, 1961 - Business disallowance - Certain deductions to be allowed only on actual payment (PF and ESI contribution) - High Court by impugned order held that amount claimed on payment of PF and ESI having been deposited on or before due date of filing of returns, same could not be disallowed under section 43B or under section 36(1)(va) - Whether SLP against said impugned order was to be dismissed - Held, yes [Para 2] [In favour of assessee]”

Respectfully following the decision of Hon’ble Supreme Court in the case of Rajasthan State Beverages Corporation Ltd. (supra), we set aside the orders of lower authorities and delete the addition of Rs.21,58,071/- and allow this ground of appeal of the assessee.

Ground No.3 of the appeal of the assessee reads as under :- “3. For that, the disallowance of expenses amounting to Rs.32,000/- claimed towards donation by the Ld. AO is illegal, unjustified and unwarranted and devoid of any merit, being genuine business expenditures, being intrinsic and inseggregable nexus with the work undertaken, deserves to be allowed in Toto.”

At the time of hearing the AR of the assessee submitted that he is not pressing this ground of appeal. Hence, this ground of appeal of the assessee is dismissed for want of prosecution.

In the result, appeal filed by the assessee is partly allowed. Order pronounced in the open court on this 06/03/2018. (PAVAN KUMAR GADALE) (N. S. SAINI) न्यानयक सदस्य / JUDICIAL MEMBER ऱेखा सदस्य / ACCOUNTANT MEMBER कटक Cuttack; ददनाांक Dated 06/03/2018 प्र.कु.मि/PKM, Senior Private Secretary आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant- M/s Gorakhnath Construction Pvt. Ltd. E-42, Koel Nagar, Rourkela प्रत्यथी / The Respondent-

ACIT, Rourkela Circle, Rourkela आयकर आयुक्त(अपील) / The CIT(A), 3. आयकर आयुक्त / CIT 4. निभागीय प्रनतनिनर्, आयकर अपीलीय अनर्करण, कटक / DR, ITAT, Cuttack 5. गार्ड फाईऱ / Guard file. 6. सत्यापपत प्रतत //// आदेशािुसार/ BY ORDER, (Senior Private Secretary) आयकर अपीऱीय अधिकरण, कटक / ITAT, Cuttack