NEXWAVE TALENT MANAGEMENT SOLUTIONSPRIVATE LIMITED,HYDERABAD vs. DEPUTY COMMISSIONER OF INCOME TAX,CIRCLE-5(1), HYDERABAD

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ITA 29/HYD/2022Status: DisposedITAT Hyderabad15 March 2022AY 2019-203 pages

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

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the legislative amendments and CBDT clarifications regarding ESI/PF disallowances apply prospectively from April 1, 2021. Therefore, the impugned disallowance for AY 2019-20 was not sustainable.

What were the facts?

The assessee's appeal concerns an ESI/PF disallowance of Rs. 55,84,180 for AY 2019-20. The assessee claimed the payments were made before the due date for filing the return under Section 139(1), while the Revenue contended they were paid after the due dates prescribed by the respective statutes.

What were the issues?

Whether ESI/PF contributions paid after the due date prescribed by the respective statutes but before the due date for filing the return under Section 139(1) are disallowable for AY 2019-20, considering subsequent legislative amendments.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD ‘ B ’ BENCH, HYDERABAD.

Before: SHRI S.S. GODARA & SHRI L. P. SAHU

O R D E R Per Shri S.S. Godara, J.M. : This assessee’s appeal for Asst. Year 2019-20 arises from the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) Delhi’s order dt.23.12.2021 passed in case No.ITBA/NFAC/S/250/2021-22/1038062162(1) in proceedings under Section 143(1) of Income Tax Act, 1961 (‘the Act’).

Case called twice. None appeared at assessee's behest. Heard learned department representative. We proceed to hear exparte.

2.

Coming to the sole substantive issue of ESI/PF disallowance of Rs.55,84,180/- made in both the lower proceedings, assessee's and Revenue’s rival stands adopted before us are that the same had been paid before the due date of filing Sec.139(1) return and after the due date prescribed in the corresponding statutes; respectively. We notice in this factual backdrop that the legislature has not only incorporated necessary amendment in Sections 36(1)(va) as well as u/s. 43B vide Finance Act, 2021 to this effect but also the CBDT has issued Memorandum of Explanation that the same applies w.e.f. 01-04- 2021 only. It is further not an issue that the foregoing legislative amendments have proposed employers’ contribution/ disallowance u/s.43B as against employee’s contribution u/s.36(va) of the Act; respectively. However, keeping in mind the fact that the same has been clarified to be applicable with prospective effect from 01-04-2021 only, we hold that the impugned disallowance is not sustainable in view of all these latest developments. The impugned ESI/PF disallowance is deleted therefore. 4. These assessee’s appeal is allowed in above terms.

Order pronounced in the open court on 15th Mar.,2022.

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