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Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad
Before: Shri Laxmi Prasad Sahu & Shri Duvvuru R.L. Reddy
This is assessee’s appeal for the A.Y 2018-19 against the order of the CIT(A)’s National Faceless Appeal Centre (NFAC) order for AY 2018-19 involving proceedings u/s 143(1) of the Income Tax Act, 1961.
The only issue involved in this appeal is that the addition towards employees’ contribution to PF and ESI on the ground of late payment of the same.
The facts of the case are that the assessee a private limited company filed its return of income for the AY 2018-19 declaring total income of Rs. 2,76,78,078/-, which was processed u/s 143(1) by DCIT, CPC and an intimation u/s 143(1) was passed by making an addition of Rs. 97,75,682/- towards disallowance for delay in payment of employees contribution to PF and ESI rejecting the submission of the assessee that the amounts were paid well within the due date for filing of return of u/s 139(1) and hence allowable as deduction u/s 43B.
When the assessee preferred an appeal before the CIT(A), the CIT(A) confirmed the disallowance made by the AO.
5 We have considered the rival submissions and perused the material on record as well as gone through the orders of revenue authorities. The assessee submitted before the lower authorities that the employees’ contribution 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 authorities held that Page 2 of 4 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.”
5.1 Respectfully, following the above judgement of the co-ordinate bench of Tribunal, we delete the addition confirmed by the ld. CIT (A) on this issue and accordingly, the grounds raised by the assessee on this issue is allowed.
In the result, appeal of the assessee is allowed in above terms.
Order pronounced in the Open Court on 19th January, 2022.