DIGVIJAY AUTOMOBILES,SATARA vs. ASSISTANT DIRECTOR OF INCOME-TAX, CPC, BENGALURU

1. On the facts and in the circumstances of the case and in law the Ld. NFAC was not justified in confirming the disallowance made by the CPC-Bengaluru invoking S. 36(1)(va) of the Act. It appears the CPC-Bengaluru applied the provisions of S. 36(1)(va) but the amendment was made effective from 01-4- 2021. The disallowance is confirmed on the basis of non- existent provisions. It be deleted.

In the present appeal, the question involved is allowability of employees‟ contribution of ESIC and PF, which was deposited beyond time mentioned in the respective Statutes but before filing income tax return u/s 139(1) of the Act.

No one has appeared on behalf of the appellant-assessee. We heard ld. DR, perused the records. In this case, the ACIT (CPC), Bengaluru vide an order u/s 143(1) of the Act dated 10.04.2020 disallowed an amount of Rs.53,194/- by giving following reasons: “Any sum received from employees as contribution to any provident fund or superannuation fund or any fund set up under ESI Act or any other fund for the welfare of employees to the extent not credited to the employees account on or before the due date [36(1)(va)]”.

From the plain reading of the order u/s 143(1), it is not clear whether any opportunity was provided before making the disallowance by the ADIT (CPC), Bengaluru. As it is mentioned in the order “Please refer to this office communication dated and 09- JAN-20 sent to the email ID and digvijayautomobiles@gmail.com. As there has been no response/the response given is not acceptable A.Y. 2019-20 Digvijay Automobiles vs. CPC, Bangalore the adjustments(s) as mentioned below are being made to the total income as per the provisions of section 143(1)(a).” Aggrieved by the same, an appeal was filed before the CIT(A). The CIT(A) dismissed the appeal of assessee.

Hon‟ble Rajasthan High Court in the case of Rajasthan State Beverages Corpn. Ltd vide order dated 4/8/216 has held as under: Quote “This court in the aforesaid case has also allowed the claim of the assessee, in so far as payment of PF & ESI etc. is concerned, on the finding of fact that the amounts in question were deposited on or before the due date of furnishing of the return of income and taking in consideration judgment of this Court in CIT v. State Bank of Bikaner & Jaipur [2014] 363 ITR 70/43 taxmann.com” Unquote

The SLP filed against the said decision has been dismissed by Hon‟ble SC.

Hon‟ble Jurisdictional High Court held in the case of CIT vs Ghatge Patil Transports Ltd, IT APPEAL NOS. 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 A.Y. 2019-20 Digvijay Automobiles vs. CPC, Bangalore 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. Thus respectfully following the Hon‟ble High Courts it is held that the payment of employee‟s contribution 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.

In the result, the assessee‟s appeal is allowed.