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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI INTURI RAMA RAO & SHRI S. S. VISWANETHRA RAVI
ORDER PER INTURI RAMA RAO, AM: These are the appeals filed by the assessee directed against the separate orders of ld. Commissioner of Income Tax (Appeals)- National Faceless Appeal Centre, Delhi [‘the CIT(A)’] commonly dated 18.10.2021 for the assessment years 2018-19 and 2019-20. 2. Since the identical facts and common issues are involved in both the above captioned appeals, we proceed to dispose of the same by this common order.
2 & 605/PUN/2021 3. For the sake of convenience and clarity, the facts relevant to the appeal in ITA No.604/PUN/2021 for the assessment year 2018-19 are stated herein. ITA No.604/PUN/2021, A.Y. 2018-19 : 4. Briefly, the facts of the case are that during the course of processing of Return of Income, the CPC made disallowance of Rs.12,25,710/- in the intimation u/s 143(1) of the Income Tax Act, 1961 (‘the Act’) dated 09.08.2019 on the ground that the appellant had not deposited the employees’ share of EPF and ESI etc within due date prescribed under respective Statutes, but paid before due date for filing Return of Income under the provisions of section 139(1) of the Act. On appeal before the ld. CIT(A), the ld. CIT(A) confirmed the said disallowance.
Being aggrieved, the appellant is in appeal before us in the present appeal.
The ld. AR appearing on behalf of the appellant filed a copy of recent decision of Co-ordinate Bench of this Tribunal in the case of Shah Construction vs. ADIT in ITA No.393/PUN/2021 for A.Y. 2019-20 order dated 22.06.2022 stating that the identical issue was decided by the Tribunal in favour of the assessee. Referring to this decision of the Tribunal (supra), he submitted that principle of consistency should be applied to the facts of the present case.
3 & 605/PUN/2021 7. On the other hand, ld. Sr. DR has expressed no objection on the said submission of the assessee. 8. We heard the rival submissions and perused the material on record. The only issue raised through various grounds of appeal in this appeal is against the confirmation of disallowance of Rs.12,25,710/- made by the Assessing Officer u/s 36(1)(va) of the Act on account of late deposit of the Employees’ share of EPF and ESI etc. Considering the submission of the ld. AR and perusing the recent decision of the Tribunal (supra), we find that the identical issue was came up before this Tribunal in the case of Shah Construction (supra) wherein the Tribunal decided the identical issue in favour of the assessee relying on the decision of the Hon’ble Himachal Pradesh High Court in the case of CIT vs. Nipso Polyfabriks Ltd. (2013) 350 ITR 327 (HP). The relevant paragraphs of the said decision of the Tribunal (supra) are extracted herein under :-
4. We have heard both the sides and gone through the relevant material on record. It is an admitted position that the assessee did deduct employees’ share of EPF and ESI and paid the same after the due date under the respective legislations but before the time stipulated for filing return u/s 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 u/s 36(1)(va) of employees’ share of contribution deposited after due date under the respective Acts but before the date prescribed u/s 139 of the Act. The Hon’ble Himachal Pradesh High Court in CIT vs. Nipso Polyfabriks Ltd. (2013) 350 ITR 327 (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.
4 & 605/PUN/2021 5. 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 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 under the respective Acts, the disallowance will be called for notwithstanding the fact that it was deposited before the due date u/s 139 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 2019-20, which is anterior to the amendment carried out with effect from A.Y. 2021-22, we hold that the position of law as set out by various Hon’ble High Courts including the one in CIT vs. Nipso Polyfabriks Ltd. (supra) squarely 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 u/s 139(1) of the Act. The addition is therefore, directed to be deleted.”
Similarly, the Hon’ble Jurisdictional High Court in the case of CIT vs. Ghatge Patil Transports Ltd. 368 ITR 749 (Bom.) has taken identical view as taken by the Hon’ble Himachal Pradesh High Court in the case of Nipso Polyfabriks Ltd. (supra) and decided the issue in favour of the assessee.
Respectfully following the above judicial precedents, we hold that the ratio laid down by the Hon’ble High Courts cited above is squarely applicable to the facts of the present case. Therefore, following the principle of consistency, we direct the Assessing Officer to delete the addition of Rs.12,25,710/- made u/s 36(1)(va) of the Act.
In the result, the appeal filed by the assessee in ITA No.604/PUN/2021 for A.Y. 2018-19 stands allowed.