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Income Tax Appellate Tribunal, HYDERABAD BENCHES “A”: HYDERABAD
Before: SHRI AAKASH DEEP JAIN & SHRI LAXMI PRASAD SAHU
O R D E R PER BENCH: This appeal filed by the assessee is directed against CIT(A), National Faceless Appeal Centre (NFAC), Delhi’s order, dated 23/12/2021 for AY 2019-20 involving proceedings u/s 143(1) of the Income Tax Act, 1961 ; in short “the Act”.
The only issue raised in the grounds of appeal is against the action of the lower authorities in making the :- 2 -: Abhayanjaneya Health Care Pvt. Ltd., Nellore. addition towards employees’ contribution to PF & ESI made on the ground that the same was not paid before the due date as provided u/s 36(1)(va) of the I.T. Act.
3. Briefly, the facts of the case are that on perusal of Form 3CD report, the AO/CPC observed that employees contributions to PF/ESI had been remitted by the Assessee before the due date of filing of return u/s 139(1), but, after the due dates specified under respective Acts. He, therefore, disallowed an amount of Rs. 59,85,706/- remitted towards employees contribution to PF & ESI.
4. When the assessee preferred an appeal before the CIT(A), the CIT(A) confirmed the disallowance made by the AO by discussing the issue elaborately with various case laws.
5 Aggrieved, the assessee is in appeal before the ITAT.
None appeared on behalf of the assessee at the time of hearing of this appeal. However, we proceed to dispose of this appeal after hearing the ld. DR and considering the facts available on record.
Before us, the ld. DR, relied on the orders of revenue authorities and submitted that since the assessee failed to remit the employees contributions towards PF & ESI, within
:- 3 -: Abhayanjaneya Health Care Pvt. Ltd., Nellore. the due date as prescribed under the respective Acts, the revenue authorities disallowed the same u/s 36(1)(va) of the Act. Further, he submitted that the amendment made in the Act will not affect the earlier addition made by the AO on this issue.
We have considered the submissions of Ld. DR and perused the material on record as well as gone through the orders of revenue authorities. It is observed that the assessee had filed its return income on 10/09/2019 and filed its revised return of income on 30/11/2020 against the extended due date for filing of original return on 31/10/2019. The assessee submitted before the lower authorities that the employees’ contributions to PF & ESI paid after the due date, but, before the due date of filing the return of income. Therefore, the issue has been settled that if the assessee has paid the PF and ESI payments before the due date of filing of return income u/s 139(1) of the Act, no disallowance is warranted as held by the coordinate bench of the ITAT Hyderabad in case of for Assessment Year: 2013-14, in case of Value Momentum Software Services Private Limited, Vs Deputy Commissioner of Income Tax, in which, it was held as under:
“5. Next comes the latter issue of Section 43B disallowance of Rs.8,11,648/- pertaining to employees provident fund. It is not in dispute that learned lower
:- 4 -: Abhayanjaneya Health Care Pvt. Ltd., Nellore. authorities held that the same had to be deposited before the due date prescribed in the corresponding statute than the due date for filing Section 139(1) return. The Revenue’s case in tune thereof relies on Section 36(va) read with explanation thereto that it is not Section 43B but the former provision which is applicable in such an instance. We find no merit in the Revenue’s foregoing stand. We take note of the explanatory memorandum to the Finance Act, 2021 proposing amendment in both Section 36(va) as well as Section 43B by inserting corresponding Explanations that although the impugned employees provident fund comes under the former provision only, the same is applicable from 01-04-2021 onwards. Meaning thereby that the legislature itself has condoned the impugned default before 01-04-2021. We thus delete the impugned employees provident fund disallowance of Rs.8,11,648/- for this precise reason alone. Necessary computation to follow as per law.”
8.1 As the issue is settled that if the assessee is remitted the employees contribution towards PF & ESI before filing of the return u/s 139(1) of the Act, no disallowance can be made under these heads. Therefore, following the decision of the coordinate bench cited supra, we direct the AO to delete the addition made on account employees contribution of PF & ESI of Rs. 59,85,706/-. Accordingly, the grounds raised by the assessee on this issue are allowed.
:- 5 -: Abhayanjaneya Health Care Pvt. Ltd., Nellore.
In the result, appeal of the assessee is allowed in above terms. Pronounced in the open court on March, 2022.