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Income Tax Appellate Tribunal, PUNE BENCH, ‘B’ PUNE
Before: SHRI R.S. SYAL & SHRI S.S. VISWANETHRA RAVI
आदेश / ORDER
PER R.S. SYAL, VP : These two appeals by the assessee are directed against the orders dated 12-03-2021 passed by the National Faceless Appeal Centre (NFAC), Delhi u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment years 2018-19 and 2019-20. These appeals involve a solitary issue of the confirmation of disallowance u/s.36(1)(va) of Act.
For the sake of convenience, we proceed to dispose them off by this consolidated order.
These appeals are time barred by 52 days. The assessee has filed condonation application stating the reasons for the delay, being, the lock down declared by the Govt. of Maharashtra owing to Covid-19 pandemic. Under such circumstances, the delay is condoned by virtue of the judgment of the Hon’ble Supreme Court in Cognizance for Extension of Limitation, In re 438 ITR 296 (SC) read with judgment in Cognizance for Extension of Limitation, In re 432 ITR 206 (SC) dated 08-03-2021 and 421 ITR 314. The instant appeals are, ergo, admitted for disposal on merits.
Briefly stated, the facts for the A.Y. 2018-19 are that the Assessing Officer (AO) made disallowance of Rs.11,03,787/- in the intimation u/s.143(1) of the Act on the ground that the assessee late deposited the employees’ share of EPF/ESI. The facts for the A.Y. 2019-20 are mutatis mutandis similar. For this year also, the AO made disallowance of Rs.7,38,547/- u/s.36(1)(va) of the Act in the intimation u/s.143(1) of the Act.
The ld. CIT(A) sustained the disallowances. Aggrieved thereby, the assessee has come up in appeal before the Tribunal for the two assessment years under consideration.
We have heard the assessee, who appeared in person and the learned DR; and also gone through the relevant material on record. It is an admitted position that the assessee did deduct EPF and ESI from the employees’ share but deposited the same with exchequer a little bit late on some occasions after the due date under the respective legislations but before the time stipulated for filing returns u/s 139(1) of the Act for both the years. 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.
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 years under consideration, namely, 2018-19 and 2019-20 are 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 appeals, thereby not warranting any disallowance since the amounts in question were admittedly deposited before due date u/s 139(1) of the Act. The additions are, therefore, directed to be deleted.
In the result, both the appeals are allowed.
Order pronounced in the Open Court on 20th June, 2022.