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Income Tax Appellate Tribunal, “A”
Before: SHRI S.S.GODARA & DR. DIPAK P. RIPOTE
आयकरअपीलीयअिधकरण“ए” "ायपीठपुणेम"। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकरअपीलसं. / ITA No.316/PUN/2021 िनधा"रणवष" / Assessment Year : 2017-18 Kumar Agro Products Pvt. The Assistant Commissioner Ltd., Vs of Income Tax, Circle-14, 2413, 1st Floor, Kumar Pune. Capital, East Street, Camp, Pune – 411001. PAN: AAACK 7660 H Appellant/ Assessee Respondent / Revenue Assessee by Shri Rajendra Agiwal – AR Revenue by Shri Ramnath P Murkunde – DR Date of hearing 13/09/2022 Date of pronouncement 29/09/2022 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This appeal filed by the Assesseeisdirected against the order of ld.Commissioner of Income Tax(Appeals)[(NFAC)], Delhi under section 250 of the Income Tax Act, for the Assessment Year 2017-18 dated 19.07.2021. The Assessee raised the following grounds of appeal: “1. erred in upholding action of the learned AO in the assessing total loss to Rs. 4,79,85,807 as against returned loss of Rs. 4,83,21,611;
Disallowance of Rs. 3,35,804 under section 36(1)(va) of the Act, on account of delayed payment of employees contribution to Provident Fund/Employees State Insurance Corporation (PF / ESIC)
ITA No.316/PUN/2021 for A.Y. 2017-18 Kumar Agro Products Pvt. Ltd.,[A]
erred in upholding the addition made by the learned AO in respect of employee’s contribution made towards PF/ ESIC of Rs. 3,35,804, without appreciating the fact that these dues were paid before the due date of filing return of income and hence the same has to be allowed as deduction, while computing the total income;
should have appreciated that employees’ contribution to PF/ESIC, was made after the statutory due date but within the same financial year and hence the same has to be allowed as deduction, while computing the total income;
erred in upholding the addition, by holding that, Explanation 2 to section 36(va) and Explanation 5 to section 43B inserted by Finance Act 2021, w.e.f 1-4-2021 is applicable to the present assessment year, without appreciating that these amendments are prospective in nature;
erred in not following jurisdictional Bombay High Court decisions and thereby violated the principle of judicial discipline without appreciating the fact that the principle of judicial discipline requires that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities.
Carry forward of current year loss of Rs. 4,83,21,611 6. erred in upholding the action of the learned AO of carrying forward loss of Rs.4,79,85,807 instead of Rs. 4,83,21,611 as claimed by the Appellant in its return of income;
Erroneously granted short interest under section 244A of the Act 8. erred in upholding the action of the learned AO of short grant of interest under section 244A of the Act;
Initiation of penalty proceedings under section 270A of the Act 9. erred in upholding the action of the learned AO of initiating penalty proceedings on the above u/s 270A of the Act.”
ITA No.316/PUN/2021 for A.Y. 2017-18 Kumar Agro Products Pvt. Ltd.,[A]
The only issue raised in this appeal is against the confirmation of disallowance of Rs.3,35,804/- made by the Assessing Officer (AO), ACIT, Circle-14, Pune under section 36(1)(va) of the Act on account of late deposit of the Employees’ share of EPF, in the order passed u/s.143(3) of the Act.
Briefly stated facts of the case are that the ACIT, Circle-14, Pune [AO] made disallowance of Rs.3,35,804/-in the order under section 143(3) of the Act on the ground that the assessee late deposited the employees’ share of EPF. The ld.CIT(A) affirmed the disallowance.
We have heard both the sides. It is seen as an admitted position from the impugned order as well as the statement of facts before the ld. first appellate authority that the assessee did deduct employees’ share of EPF and paid the same after the due date mentioned under the respective legislations but before the time stipulated for filing return under section 139(1) of the Act for the year under consideration. In our opinion, this issue is no more res integra in view of several judgments allowing deduction under section 36(1)(va) of employees’ share of contribution deposited after due date under the respective Acts but before the date prescribed under section 139(1) of the Act. The Hon’ble Himachal Pradesh High Court in CIT vs. NipsoPolyfabriks Ltd. (2013) 350 ITR 327
ITA No.316/PUN/2021 for A.Y. 2017-18 Kumar Agro Products Pvt. Ltd.,[A]
(HP) has held that there exists no difference between employees or employer’s contribution and both are to be allowed as deduction if deposited before the due date of filing Return of Income.
Also, the Hon’ble Jurisdictional High Court held in the case of CIT Vs. Ghatge Patil Transports Ltd, IT APPEAL No’s.1002 & 1034 of 2012 vide order dated 14/10/2014 as under : Quote , “ In this manner, the amendment provided by Finance Act, 2003 put on par the benefit of deductions of tax, duty, cess and fee on the one hand with contributions to various Employees' Welfare Funds on the other. All this came up for consideration before the Hon'ble Supreme Court in the case of Alom Extrusions Ltd. (supra). The Tribunal in the case at hand relied upon the said judgment. There is no reason to fault the order passed by the Tribunal. We are of the view that the decision of the Supreme Court in Alom Extrusions Ltd. (supra) applies to employees' contribution as well as employers' contribution. Question Nos.2, 3 & 4 are accordingly answered in favour of the assessee and against the revenue.” Unquote.
At this juncture, it is relevant to mention that the Finance Act, 2021 has inserted Explanation 2 below section 36(1)(va) providing that the provisions of section 43B shall not apply for the purpose of determining the due date mentioned under this clause w.e.f. 01.04.2021. The effect of this amendment is that if the amount of employees’ contribution towards EPF, ESI, etc is delayed by an employer beyond the due date mentioned under the respective Acts, the disallowance will be called for notwithstanding the fact that it was deposited before the due date of filing return of Income under ITA No.316/PUN/2021 for A.Y. 2017-18 Kumar Agro Products Pvt. Ltd.,[A]
section 139(1) of the Act. The Memorandum explaining the provisions of the Finance Bill, 2021, provides that this amendment will take effect from 1st April, 2021 and will, accordingly apply in relation to Assessment Year 2021-2022 and subsequent assessment years. Since the assessment year under consideration is 2017-18, which is anterior to the amendment carried out with effect from Assessment Year 2021-22, we hold that the position of law as set out by various Hon’ble High Court applies to the facts and circumstances of the instant case, thereby not warranting any disallowance since the amount in question was admittedly deposited before due date of filing return of Income u/s.139(1) of the Act.
Thus, respectfully following the decisions of the Hon’ble High Court(supra) mentioned above, it is held that the payment of employee’s contribution of EPF beyond the due date mentioned in the relevant statute but before the due date of filling the return of income u/s 139(1) is allowable expenditure, therefore, the addition is directed to be deleted. Accordingly, Ground No.1to 5 raised by the assessee are allowed.
The Ground No.6 is regarding carry forward of loss. In this case, the appellant in the return of income had claimed carry forward of loss of Rs.4,83,21,611/-. The Assessing Officer(AO) reduced the loss due to the disallowance of Rs.3,35,804/- of EPF. The ld.CIT(A)
ITA No.316/PUN/2021 for A.Y. 2017-18 Kumar Agro Products Pvt. Ltd.,[A]
confirmed the disallowance. In our opinion, in the assessment order and ld.CIT(A)’s order, there is no mistake in calculating the loss as they have merely reduced the loss by Rs.3,35,804/- which was the disallowance. However, now we have held in earlier para that the amount of Rs.3,35,804/- is an allowable expenditure, accordingly, the AO shall re-calculate the loss. Accordingly, the Ground No.6 is allowed for statistical purposes.
The Ground No.7 is regarding interest under section 244A of the Act. The ld.CIT(A) had directed the AO to calculate the interest under section 244A as per the Act. We do not find any infirmity in the said direction, therefore, we also direct the AO to calculate the interest under section 244A as per the Act. Accordingly, Ground No.7 is allowed for statistical purposes.
The Ground No.8 is pre-mature and does not need any adjudication, hence, the Ground No.8 is dismissed as not adjudicated.
In the result, appeal of the assessee is Partly Allowed.
Order pronounced in the open Court on 29th September, 2022. (S.S.GODARA) JUDICIAL MEMBER पुणे / Pune; "दनांक / Dated : 29th Sep, 2022/ SGR*
ITA No.316/PUN/2021 for A.Y. 2017-18 Kumar Agro Products Pvt. Ltd.,[A]
आदेशक""ितिलिपअ"ेिषत / Copy of the Order forwarded to : अपीलाथ" / The Appellant. 1. ""यथ" / The Respondent. 2. 3. The CIT(A), concerned. 4. The Pr. CIT, concerned. िवभागीय"ितिनिध, आयकर अपीलीय अिधकरण, “ए” ब"च, 5. पुणे / DR, ITAT, “A” Bench, Pune. गाड"फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER, //// Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune.