VIJAYA DIAGNOSTIC CENTRE LIMITED,HYDERABAD vs. DEPUTY COMMISSIONER OF INCOME TAX,CIRCLE-8(1), HYDERABAD

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ITA 28/HYD/2022Status: DisposedITAT Hyderabad10 March 2022AY 2018-193 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 disallowance was not sustainable. This was because the legislative amendments and CBDT clarification regarding Section 36(1)(va) and Section 43B were applicable prospectively from April 1, 2021.

What were the facts?

The assessee's appeal concerned a disallowance of Rs. 10,24,086/- related to ESI/PF contributions for AY 2018-19. The disallowance was made in lower proceedings.

What were the issues?

Whether the disallowance of employee's contribution to ESI/PF is sustainable when paid after the statutory due date but before the due date for filing the return, considering recent legislative changes.

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 BENCHES “A” : HYDERABAD

Before: SHRI S.S.GODARA & SHRI LAXMI PRASAD SAHU

PER S.S.GODARA, J.M. : This assessee’s appeal for AY.2018-19 arises from the from the National Faceless Appeal Centre (NFAC), Delhi’s order dated 17-12-2021 passed in DIN & Order No.ITBA/NFAC/S/250/2021-22/1037893750(1), involving proceedings u/s.143(1) of the Income Tax Act, 1961 [in short, ‘the Act’]. Heard both the parties. Case file perused.

2.

Coming to the assessee’s sole substantive issue raised herein of Section 36(1)(va) ESI/PF disallowance of Rs.10,24,086/- (as against the actual amount stated of Rs.9,72,543/-) made in both the lower proceedings, the assessee’s and Revenue’s pleas before us are that the same has been paid before the due date of filing Sec.139(1) return and after the due date prescribed in the corresponding statute(s); 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. No other ground has been pressed before us.

3.

This assessee’s appeal is allowed in above terms.

Order pronounced in the open court on 10th March, 2022

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