CIGNITI TECHNOLOGIES LIMITED,HYDERABAD vs. DEPUTY COMMISSIONER OF INCOME TAX,CIRCLE-1(1), HYDERABAD

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ITA 527/HYD/2021Status: DisposedITAT Hyderabad14 February 2022AY 2019-20203 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 impugned disallowance was not sustainable. This was in light of the legislative amendments to Sections 36(1)(va) and 43B, and the CBDT's clarification that these amendments apply prospectively from 01.04.2021.

What were the facts?

The assessee claimed a deduction for ESI/PF contributions. The lower authorities disallowed the deduction of Rs. 52,75,976/-. The assessee argued the payment was made before the due date of filing the return under Section 139(1).

What were the issues?

Whether ESI/PF contributions paid after the due date prescribed by the respective statutes but before the due date of filing the return under Section 139(1) are allowable as a deduction for the assessment year 2019-20.

Which sections of the Income-tax Act were involved?

Section 36(1)(va),Section 43B,Section 139(1),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad

Before: Shri A. Mohan Alankamony & Shri S.S. Godara

For Appellant: Shri P. Murali Mohan Rao
For Respondent: Shri Sunil Gowtham
Hearing: 10.02.2022Pronounced: 14.02.2022

O R D E R Per S. S. Godara, J.M. This assessee’s appeal for A.Y. 2019-20 arises from the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi’s order dated 09.11.2021 in case No.ITBA/ NFAC/S/250/2021-22/1036793544(1) involving proceedings u/s 250 of the Income Tax Act, 1961 [in short, ‘the Act’].

2.

Coming to the sole substantive issue of ESI/PF disallowance of Rs.52,75,976/- made in both the lower proceedings, the assessee’s and Revenue’s plea(s) 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. 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 only with prospective effect from 01- 04-2021, we hold that the impugned disallowance is not sustainable in view of all these latest developments. The impugned ESI/PF disallowance is deleted therefore.

3.

This assessee’s appeal is allowed in above terms.

Order pronounced in the Open Court on 14th February, 2022.

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