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Income Tax Appellate Tribunal, Hyderabad ‘A’ Bench, Hyderabad
Before: Shri Rama Kanta Panda & Shri Laliet Kumar
Per Shri Rama Kanta Panda, A.M. This appeal filed by the assessee is directed against the order dated 30.07.2021 of the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi for the AY 2017-18.
There is a delay of ‘205’ days in filing of this appeal by the assessee, for which assessee has filed a condonation application along with an affidavit explaining the reasons for such delay, which is due to the COVID. After hearing both the sides and considering the contents in the condonation application filed
2 ITA 131/Hyd/2022 along with an affidavit, the delay in filing of this appeal by the assessee is condoned and the appeal is admitted for hearing.
Although, a number of grounds have been raised by the assessee, however these all relate to the order of the NFAC in sustaining the disallowances made by the AO amounting to Rs. 33,34,014/- being delay in deposit of Employee’s contribution to PF.
Facts of the case, in brief, are that the assessee is a District co-operative Bank carrying on the business of banking in the Nellore district of Andhra Pradesh State. The assessee filed its return of income on 28.10.2017, declaring total income of Rs. 21,75,937/- after set-off of brought forward loss of Rs. 78,02,536/-.
During the course of assessment proceedings, the AO noted from the details in Form No-3CD, find the assessee had made delay in remitting the employees’ contribution of PF, the details of which are as under:-
S.No. Month of Employee’s Due date Actual date Contribution share of for Payment of Payment contribution 1 May 2016 4,55,582 15.06.2016 16.06.2016 2 August 2016 5,08,737 15.09.2016 22.09.2016 3 October 2016 23,69,695 15.11.2016 16.11.2016 Total 33,34,014
Rejecting the various explanation given by the assessee, the AO made an addition of Rs. 33,34,014/-. In appeal, the ld.NFAC sustained addition made by the AO.
3 ITA 131/Hyd/2022
Aggrieved with such order of the ld.NFAC, the assessee is in appeal for the Tribunal.
The ld. Counsel for the assessee referring to various decisions submitted that the co-ordinate Benches of the Tribunal are taking the consistent view that if the employees’ contribution to PF and ESIC are paid before the due date of filing of the return, no disallowance u/s. 36(1)(va) r.w.s. 2(24)(x) shall be made. He accordingly submitted that this being a covered matter in favour of the assessee, the order of the ld.NFAC be set aside and the addition made by the AO and upheld by the ld.NFAC should be deleted
The ld.DR on the other hand heavily relied on the order of the ld.NFAC. He submitted that the Finance Act, 2021 has amended the provisions of section 43B, as well as section 36(1)(va) by insertion of explanation to those sections. He drew the attention of the Bench to the explanatory notes to the Finance Bill, 2021 and submitted that the legislature never intended that section 43B would apply to employees’ contribution. He submitted that the language of explanation 5 to section 43B, explanation 2 to section 36(1)(va) and that of the Memorandum explaining the Finance Act, 2021 make it abundantly clear that employees’ contribution is out of the ambit of section 43B. Relying on various decisions, he submitted that the ld.NFAC was fully justified in upholding the addition made by the AO on account of delayed payment of EPF amounting to Rs.33,34,014/-.
We have heard the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various
4 ITA 131/Hyd/2022 decisions cited before us by both sides. We find the AO in the instant case made addition of Rs. 33,34,014/-. on account of delayed deposit of employees’ contribution to PF on the ground that the same were deposited beyond the due date prescribed in the said Act. We find the ld.NFAC rejected the contention of the assessee that such payments though made after the stipulated dates prescribed in the said Act, however these payments were made before the due date of filing of the return. We find the coordinate Benches of the Tribunal are now consistently taking the view that no disallowances u/s. 36(1)(va) r.w.s. 2(24)(x) can be made on account of delayed payment of PF and ESIC, if such payments are made before the due date of filing of the return. It has further been held in these decisions that the amendment to section 43B as well as section 36(1)(va) r.w.s. 2(24)(x) by the Finance Act, 2021 are prospective and not retrospective in nature. Since, the assessee in the instant case has admittedly paid the employees’ contribution to PF before the due date of filing of the return, therefore, we set aside the order of the ld.NFAC and direct the AO to delete the addition. The grounds raised by the assessee are accordingly allowed.
In the result, the appeal filed by the assessee is allowed
Order pronounced in the Open Court on 22nd June, 2022.