ACIT CENTRAL CIRCLE-8(1), HYDERABAD vs. VIJAI ELECTRICALS LIMITED, HYDERABAD

PDF · subscribers
ITA 53/HYD/2022Status: DisposedITAT Hyderabad10 May 2022AY 2019-205 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that employees' contributions to PF and ESI, if paid on or before the due date of filing the return of income, are eligible for deduction. The recent amendments were considered clarificatory and prospective.

What were the facts?

The assessee claimed deduction for delayed remittances of employees' PF/ESI contributions, which were paid before the due date for filing the return of income. The Assessing Officer disallowed this amount, but the First Appellate Authority allowed the deduction.

What were the issues?

Whether delayed remittances of employees' PF/ESI contributions, paid before the due date of filing the return, are allowable as a deduction under the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 43B,Section 36(1)(va),Section 139(1)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, HYDERABAD BENCHES “B”, HYDERABAD

Before: SHRI RAMA KANTA PANDA & SHRI K.NARASIMHA CHARY

For Appellant: Shri S.Rama Rao
For Respondent: Shri Rohit Mujumdar
Hearing: 09/05/2022

ORDER PER K. NARASIMHA CHARY, JM: Challenging the order dt.28/12/2021, passed u/s.250 of the Income Tax Act, 1961 (“the Act”) in the case of M/s.Vijai Electricals Limited, (“the assessee”), Revenue preferred this appeal, stating that the delayed remittances of employees’ contributions towards PF/ESI is not allowable u/s.43B of the Act inspite of specific provisions of the Act u/s.36(1)(va) of the Act.

2.

Brief facts of the case are that a sum of Rs.1,49,99,997/- was disallowed u/s.36(1)(va) of the Act for the delayed payments of ESI/PF contribution of the employees by the employer, but which was paid before the due date of filing the return of income u/s.139(1) of the Act. When the appeal was preferred, a view is taken to the effect that the decision of the Hon'ble Apex Court in the case of CIT Vs. Vinay Cement Limited (2007) 213 CTR 268 (Supreme Court), followed by the Hon'ble High Court in the case of CIT Vs. AIMIL Limited (2010) 188 Taxmann 265 (Delhi) is applicable to the facts of the case and the employees’ contribution towards PF and ESI would qualify for deduction even if it is paid after due date prescribed under the Provident Fund Act and ESI Act but before the due date for filing the return of income. The appellate order further reads that this view has been followed in various other decisions by many Hon'ble High Courts. Appeal of the assessee, therefore, allowed and the addition was deleted.

3.

It is argued before us by the Ld.DR that the amendments that were brought through the Finance Act, 2020-21, amendment to Section 43B and Section 36(1)(va) of the Act only reiterate the intention of the legislature that in respect of the employees’ contribution to PF and ESI, provisions of Section 43B of the Act shall deemed to have never been applied. It is further submitted that such amendments by way of Finance Act, 2021 are purely clarificatory to clear the meaning of the provision of the principal Act.

4.

Per contra decision submitted on behalf of the assessee that the assessee is entitled to the deduction of the employees’ contribution to PF and ESI having regard to the provisions u/s.43B of the Act and the Hon'ble Karnataka High Court held so in Essae Teraoka Pvt. Ltd. Vs. DCIT [366 ITR 408] (Kar). Ld.AR also submitted the Co-ordinate Bench’s decision in the cases of – M/s.Plivo Communications Private Limited Vs. The Asst.Commissioner of Income Tax, CPC (ITA No.716/Bang/2021) and in the case of Srinivas Achar Mohankumar Vs. Income Tax Officer [2022] (135 taxmann.com 129) (Bangalore – Trib) in support of his arguments.

5.

We have gone through the record in the light of the submissions made on either side. As a matter of fact, the issue involved in this case is no longer res integra and has been covered by the Hon'ble Karnataka High Court’s decision in the case of Essae Teraoka Pvt. Ltd. Vs. DCIT (supra) and also the view taken by the Co-ordinate Bench in the case of Shakuntala Agarbathi Company Vs. Dy.CIT (IT Appeal No.385(Bang) of 2021, dt.21/10/2021). In a number of appeals, the Hyderabad Bench of the Tribunal had also taken the view that the assessee is entitled to the deduction of employees’ contribution to PF and ESI as is held by the Hon'ble Delhi High Court in the case of CIT Vs. AIMIL Limited (supra), following the decision of Hon'ble Supreme Court in the case of CIT Vs. Vinay Cement Limited (supra). Further, various Benches of the Co-ordinate Benches of the Tribunal are taking the consistent view that the employees’ contribution to PF and ESI, if paid on or before the due date of filing of the return, no disallowance be made. It has further been held that the amendment of Section 36(1)(va) by the Finance Act, 2021 is prospective and not retrospective. Since the view taken by the First Appellate Authority is consistent with the view taken by the Co-ordinate Benches in a number appeals, in line with the decision of the Hon'ble Apex Court in the case of CIT Vs. Vinay Cement Limited (supra) and Hon'ble Delhi High Court in the case of AIMIL (supra), we do not find any irregularity or illegality in the findings returned by the First Appellate Authority and accordingly, uphold the same. The appeal is, therefore, devoid of merits and deserves to be dismissed. We order accordingly.

6.

In the result, the appeal of Revenue is dismissed.

Order pronounced in the open court on this the 10th day of May, 2022

More judgments on Section 43B

All 7,161 judgments and leading authorities on Section 43B →

Recent GST High Court judgments

Search GST case law →