TANAJI KADAM,PUNE vs. CENTRALIZED PROCEEDINGS CENTRE (CPC), BENGALURU

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ITA 408/PUN/2021Status: DisposedITAT Pune12 September 2022AY 2018-193 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the amendment to Section 36(1)(va) of the Income Tax Act, 1961, which is applicable from April 1, 2021, was not applicable to the assessment years in question. Since the assessee paid the employee's contribution before the due date of filing the Income Tax Return, the disallowance was not justified.

What were the facts?

The assessee, engaged in manpower services, had employee contributions to PF disallowed for delayed payment. The assessee claimed payment was made before the due date of filing the income tax return.

What were the issues?

Whether the disallowance of employee's contribution to PF for delayed payment is justified when paid before the due date of filing the return of income, considering the applicability of amendments.

Which sections of the Income-tax Act were involved?

Section 36(1)(va)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, PUNE

Before: SHRI INTURI RAMA RAO & SHRI S.S. VISWANETHRA RAVI

For Appellant: Shri Kishor Phadke
For Respondent: Shri M.G. Jasnani

आदेश / ORDER

PER S.S. VISWANETHRA RAVI, JM :

1.

Both these appeals by the assessee against the separate order dated 12-08-2021 and 27-07-2021 passed by the National Faceless Appeal Centre, Delhi (‘NFAC’) for assessment years 2018-19 and 2019-20, respectively.

2.

The only issue emanates for our consideration in both the appeals is as to whether the CIT(A), NFAC, Delhi justified in confirming the disallowance u/s. 36(1)(va) of the Act on account of employee’s contribution to ESIC/PF in the facts and circumstances of the case.

3.

We note that the assessee is an individual engaged in the business of providing manpower service under the name and style as “Perfect Facility Services”. The CPC, Bangalore vide intimation u/s. 154 of the Act made additions of Rs.4,51,801/- and Rs.75,00,678/- for A.Ys. 2018-19 and 2019-20, respectively on account of disallowance u/s. 36(1)(va) towards delayed payment of employee’s contribution to provident fund. The assessee contended that the employee’s contribution towards PF has been paid before the due date of filing of return of income for A.Ys. 2018-19 and 2019-20 but however the CPC, Bangalore as well as CIT(A), NFAC, Delhi did not accept the submissions of assessee and the CIT(A), NFAC held that the assessee would be entitled to deduction only if the contribution to the employee’s welfare fund stood credited on or before the due date under the respective Act. We note that the NFAC by following the amendment made by Finance Act, 2021 to section 36(1)(va) of the Act found the submissions of assessee regarding deposit of employees contribution before the due date of filing return of income not acceptable. We note that the said amendment is applicable from 1st April, 2021 and since the assessment under consideration is A.Ys.2018-19 and 2019-20, the amendment is not applicable to the facts on hand. We note that the CIT(A) did not dispute that the assessee paid the employee’s contribution towards provident fund before the due date of filing of Income Tax Return. Therefore, the order of CIT(A) is not justified and it is set aside. Thus, the assessee is entitled for deduction and grounds raised by the assessee are allowed in both the appeals.

4.

In the result, both the appeals of assessee are allowed.

Order pronounced in the open court on 12th September, 2022.

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