M/S. TAMILNADU SALT CORPORATION LIMITED,CHENNAI vs. DCIT CORPORATE CIRCLE - 3(1), CHENNAI

This appeal filed by the assessee is directed against the order of the ld. Principal Commissioner of Income Tax/CIT-3, Chennai dated 24.06.2020 relevant to the assessment year 2015-16.

The appeal filed by the assessee is delayed by 65 days in filing the appeal before the Tribunal due to outbreak of COVID-19 pandemic and accordingly, the delay is condoned and admitted the appeal for adjudication.

Facts are, in brief, that the assessee filed its return of income for the assessment year 2015-16 on 27.09.2015 declaring an income of ₹.64,65,270/-. The case was selected for scrutiny and after following due procedure, the Assessing Officer has completed the assessment under section 143(3) of the Income Tax Act, 1961 [“Act” in short] dated 29.09.2017, which was subjected to the order under section 263 of the Act. In the revision order under section 263 of the Act, the ld. PCIT/CIT-3 has directed the Assessing Officer to disallow the claim of employee’s contribution towards Provident Fund amounting to ₹.67,03,676/- as per section 36(1)(va) r.w.s. 2(24)(x) of the Act.

Before the Tribunal, the ld. Counsel for the assessee has submitted that there was delay in remittance of employee’s contribution towards Provident Fund, however, the assessee has made the above remittance before due date of filing of return. Further, he has relied on the decision of the Coordinate Benches of the Tribunal in the case of Adyar Ananda Bhavan Sweets India P. Ltd. v. ACIT in & 403/Chny/2021 dated 08.12.2021, wherein, by following various case law, the Tribunal has further make it clear that the payment of employees contribution in regard to PF & ESI if made before the due date of filing of return of income under section 139(1) of the Act, the same is allowable as deduction as per the provisions of section 2(24)(x) r.w.s. 36(1)(va) r.w.s. 43B of the Act, the ld. Counsel for the assessee has prayed that the Assessing Officer may be directed to follow the above decision of the ITAT.

On the other hand, the ld. DR strongly supported the revision order passed by the ld. PCIT/CIT-3 under section 263 of the Act.

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In this case, the ld. PCIT/CIT-3 has directed the Assessing Officer to disallow the claim of employees contribution towards Provident Fund amounting to ₹.67,03,676/-. In this case, the ld. PCIT/CIT-3 has not given an opportunity to the Assessing Officer to examine as to whether the employees contribution has been remitted within the due date of filing of return or not. Therefore, to that extent, the order passed by the ld. PCIT/CIT-3 is not correct and needs rectification. Therefore, we are modifying the order passed by the ld. PCIT/CIT-3 directing the Assessing Officer to redo the assessment de novo in accordance with law after affording an opportunity of being heard to the assessee. We also direct the Assessing Officer that if the employees contribution towards Provident Fund has been remitted before due date of filing of return of income, the same may be allowed keeping in view of the decision in the case of Adyar Ananda Bhavan Sweets India P. Ltd. v. ACIT (supra).

In the result, the appeal filed by the assessee is partly allowed for statistical purposes.