M/S. DELOITTE HASKINS & SELLS,KOLKATA vs. ADDITIONAL DIRECTOR OF INCOME TAX , CPC, BENGALURU

Haskins & Sells Management Services Ltd. ITA No. 546/KOL/2021(AY-2017-18)-Fives Stein India Projects (P) Ltd. ITA No. 561/KOL/2021(AY-2019-20)-Rydak Syndicate Ltd. ITA No. 564/KOL/2021(AY-2019-20)-Bharat Industries ITA No. 483/KOL/2021(AY-2019-20)-Saha Textile ITA No. 489/KOL/2021(AY-2019-20)-Vishva Electrotech Ltd. ITA No. 588 & 589/KOL/2021(AY-2015-16 & 19-20)-Kanchan Vanijya Pvt. Ltd.

With the assistance of ld. representatives, we have gone through the record carefully. It revealed from the record that these appellants failed to make the payments of employees’ contribution to ESI & PF account within the due date provided under the PF & ESI Act. Therefore, the ld. Assessing Officer has disallowed the claim of assessees for grant of deduction of such contributions. This disallowance was made with the aid of section 36(1)(va) read with section 2(24)(x) of the Income Tax Act. Before us, it was contended that the issue in dispute is squarely covered by the judgment of the Hon’ble Calcutta High Court in the case of (i) CIT – vs.- Vijayshree Ltd. in ITAT No. 243 of 2011 & GA No. 26607 of 2011;(ii) CIT –vs.- Philips Carbon Black Ltd. in GA No. 1382 of 2014 & ITAT 31 of 2014; (iii) CIT –vs.- M/s. Coal India Ltd. in ITA 12 of 2015 and (iv) M/s. Akzo Nobel India Ltd. –vs.- CIT in of 2011. This aspect has been considered by the Coordinate Bench in the case of Lumino Industries Ltd. –vs.- ACIT (ITA No. 231 & 365/KOL/2021). On the other hand, ld. Sr. D.R. has contended that section 36(1)(va) as well as section 43B has been amended by the Finance Act, 2021, whereby Explanation (2) has been attached with section 36(1)(va). As per this Explanation, it has been provided that provisions of section 43B shall not apply and shall be deemed never to have been applied for the purposes of determining the “due date” under this clause. He filed a written note in this connection, which we have gone through.

On due consideration of the above facts and circumstances, we find that ITAT, Kolkata has duly examined the amendment brought in by virtue of Finance Act, 2021. On the proposition and the discussion made by the ITAT in the case of Lumino Industries Limited & Others read as under:- “17. Have heard both the parties. We note that the Finance Bill, 2021 has brought in an amendment which disallows the employees’ contribution made in PF and ESI if not made within the due date as prescribed by the respective statutes (PF Haskins & Sells Management Services Ltd. ITA No. 546/KOL/2021(AY-2017-18)-Fives Stein India Projects (P) Ltd. ITA No. 561/KOL/2021(AY-2019-20)-Rydak Syndicate Ltd. ITA No. 564/KOL/2021(AY-2019-20)-Bharat Industries ITA No. 483/KOL/2021(AY-2019-20)-Saha Textile ITA No. 489/KOL/2021(AY-2019-20)-Vishva Electrotech Ltd. ITA No. 588 & 589/KOL/2021(AY-2015-16 & 19-20)-Kanchan Vanijya Pvt. Ltd.

A perusal of the above would reveal that the ITAT, Kolkata has specifically propounded that if employees’ contribution received by an assessee and paid to ESI and PF accounts before the due date of filing of the return, then the assessee will be eligible to claim the deduction of such amounts. With the assistance of ld. representatives, we have specifically gone through each case and find that payments have been made within the due dates of filing of the return except in ITA No. 483/KOL/2021. In this case also, a claim has been made that payment was made within the due date of filing of the return. But no details were submitted before the lower authorities and for buttressing this contention, for the first time an audit report is being placed before us exhibiting the payment made before the due date of filing of the return. We confronted the ld. counsel for the assessee with regard to the above Haskins & Sells Management Services Ltd. ITA No. 546/KOL/2021(AY-2017-18)-Fives Stein India Projects (P) Ltd. ITA No. 561/KOL/2021(AY-2019-20)-Rydak Syndicate Ltd. ITA No. 564/KOL/2021(AY-2019-20)-Bharat Industries ITA No. 483/KOL/2021(AY-2019-20)-Saha Textile ITA No. 489/KOL/2021(AY-2019-20)-Vishva Electrotech Ltd. ITA No. 588 & 589/KOL/2021(AY-2015-16 & 19-20)-Kanchan Vanijya Pvt. Ltd. fact, then he informed us that basically the return of the assessee was processed at CPC, Bengaluru, wherein without asking for any explanation from the assessee, the disallowance was made. Before the ld. CIT(Appeals), it could not submit the details. Thus in a faceless disposal of appeal, the disallowance of Rs.4,99,233/- was confirmed by the ld. 1st appellate authority. We set aside the impugned orders in this appeal for a limited purpose to the file of ld. Assessing Officer. Ld. Assessing Officer shall verify, whether payments to ESI and PF accounts out of employees’ contribution has been made within the due date of filing of return or not. In case, it is found that payments of these contributions have been made within the due date of filing of the return, then no disallowance ought to be made. With the above observation, this appeal is to be treated as allowed for statistical purposes, whereas all other appeals are treated as allowed. The disallowance stands deleted in all other appeals.

In the result, is allowed for statistical purposes, whereas all other appeals of the assessees are allowed. Order pronounced in the open Court on March 9th, 2022.