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Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad
Before: Shri Rama Kanta Panda & Shri Laliet Kumar
IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ B ‘ Bench, Hyderabad
Before Shri Rama Kanta Panda, Accountant Member AND Shri Laliet Kumar, Judicial Member
ITA No.56/Hyd/2022 Assessment Year: 2017-18 LSC Steels Private Limited Vs. The Deputy Commissioner 5-2-196/1, of Income Tax, Near Ravi Weigh Bridge Circle – 16(1), Distillery Road Hyderabad. Secunderabad Hyderabad-500003 PAN : AABCL2762J (Appellant) (Respondent) Assessee by: Shri Sanjay Mutha Revenue by: Shri Rohit Mujumdar Date of hearing: 19.05.2022 Date of pronouncement: 31.05.2022 O R D E R Per Shri Rama Kanta Panda, A.M. This appeal filed by the assessee is directed against the order dated 20.11.2021 of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi for the AY 2017-18. 2. There is a delay of 47 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. After hearing both the sides, the delay in filing of this appeal by the assessee is condoned the appeal is admitted for hearing.
The only ground raised by the assessee reads as under:-
2 ITA 56/Hyd/2022 1. The commissioner ought to have allowed employee contribution remitted of Rs. 1,00,825/- after the due date with minor delay but paid before the filing of income tax return u/s. 139(1).
Facts of the case, in brief, are that the assessee is a company and filed its return of income on 26.08.2017 declaring total income of Rs. 1,27,51,240/- under the normal provision and book profit u/s. 115JB at Rs. 1,27,12,761/-. The AO in in the assessment order made addition of Rs. 1,17,988/- on account of delayed payment of PF and ESIC by invoking the provisions of section 36(1)(va) r.w.s. 2(24)(x) of the I.T.Act. Before the ld.CIT(A) the assessee submitted that the employees’ contribution to PF and ESI have been made before the due date of filing of the return and therefore, no disallowance should be made. The assessee also relied on various decisions to this proposition. However, the ld.CIT(A) was not satisfied with the arguments advanced by the assessee and upheld the action of the AO to the extent of Rs. 1,00,825/- since the balance amount was paid within the stipulated dates.
4.1. Aggrieved with such order of the ld.CIT(A) 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 CIT(A) be set aside and the addition made by the AO and upheld by the ld.CIT(A) should be deleted.
3 ITA 56/Hyd/2022 6. The ld.DR on the other hand heavily relied on the order of the ld.CIT(A). He submitted that the Finance Act, 2021 has amended the provision 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.CIT(A) was fully justified in upholding the addition made by the AO on account of delayed payment of PF and ESIC amounting to Rs. 1,00,825/-
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 decisions cited before us by both sides. We find the AO in the instant case made addition of Rs. 1,17,988/- on account of delayed deposit of employees’ contribution to PF and ESIC on the ground that the same were deposited beyond the due date prescribed in the said Act. We find the ld.CIT(A) rejected the contention of the assessee that such payments though made after the stipulated dates prescribed in the said Acts, however this payments were made before the due date of filing of the return and accordingly sustained addition to the tune of Rs. 1,00,825/-. He accordingly, upheld the action of the AO. We find the co- ordinate 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
4 ITA 56/Hyd/2022 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 instant case has admittedly paid the employees’ contribution to PF and ESIC before the due date of filing of the return, therefore, we set aside the order of the ld.CIT(A) 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 31st May, 2022.
Sd/- Sd/- (LALIET KUMAR) (RAMA KANTA PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, dated 31st May, 2022. Thirumalesh/sps Copy to: S.No Addresses 1 LSC Steels Private Limited,5-2-196/1, Near Ravi Weigh Bridge Distillery Road, Secunderabad Hyderabad-500003 2 The Dy. Commissioner of Income Tax, Circle 16(1), Hyderabad. 3 CIT(A), National Faceless Appeal Centre (NFAC), Delhi. 4 DR, ITAT Hyderabad Benches 5 Guard File By Order
Asst. Registrar, ITAT, Hyderabad Benches, Hyderabad.