JAI BALAJEE SECURITY SERVICES PRIVATE LIMITED,TIRUPATHI vs. ASSISTANT COMMISSIONER OF INCOME TAX,CIRCLE-1(1), TIRUPATI

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ITA 484/HYD/2021Status: DisposedITAT Hyderabad19 January 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 based on the Finance Act, 2021, which amended Sections 36(1)(va) and 43B, and a CBDT clarification that these amendments apply prospectively from April 1, 2021.

What were the facts?

The assessee's appeal for AY 2018-19 concerned a disallowance of Rs. 4,48,20,290/- relating to ESI/PF contributions. The assessee claimed these were paid before the due date for filing the Section 139(1) return, while the Revenue contended they were paid after the due dates prescribed by the respective statutes.

What were the issues?

The key issue was whether the disallowance of ESI/PF contributions paid after the statutory due dates but before the due date for filing the return of income was valid for the assessment year 2018-19, in light of subsequent legislative amendments.

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 ‘ B ’ BENCH, HYDERABAD.

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

For Appellant: Shri Sashank Dundu, Adv

O R D E R Per Shri S.S. Godara, J.M. : This assessee’s appeal for Asst. Year 2018-19 arises from the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) Delhi’s order dt.06.10.2021 passed in case No.ITBA/NFAC/S/250/2021-22/1036184751(1) in proceedings under Section 250 of Income Tax Act, 1961 (‘the Act’). Heard both parties. Case file perused.

2.

Coming to the sole substantive issue of ESI/PF disallowance of Rs.4,48,20,290/- made in both the lower proceedings, assessee's and Revenue’s rival stands adopted

2 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.

This assessee’s appeal is allowed in above terms. Order pronounced in the open court on 19th Jan.,2022.

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