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Income Tax Appellate Tribunal, “B”
Before: SHRI S.S.GODARA & DR. DIPAK P. RIPOTE
ORDER
PER DR. DIPAK P. RIPOTE, AM:
This appeal filed by the Assessee is directed against the order of National Faceless Appeal Centre (NFAC), Delhi under section 250 of the Income Tax Act, for the Assessment Year 2019-20 dated 26.10.2021. The Assessee raised the following grounds of appeal: “1) On the facts and in the circumstances of the case and in law the Ld. NFAC-Delhi was not justified in disallowing contribution made to EPF under S. 36(1)(va) holding that the amended law applied w.e.f. 01-4-2021 being clarificatory and retrospective amendment. In view of this the new law was applicable and as the contribution received from employee was not credited before due date of the parent Act. There is no retrospective effect to the amendment. It be held accordingly. 2) On the facts and in the circumstances of the case and in law NFAC has wrongly held that the amended law applied w.e.f. 1-4- 2021 was clarificatory nature and applied all pending assessments also. The inserted Explanation 2 to clause (va) of sub-section (1) to clarify that provisions of section 43B shall not apply and shall be A.Y. 2019-20 Ravi Sopan Agarkar Vs. ITO, Ward-8(1), Pune [A] deemed never to have been applied for the purposes of "due date" under the said clause. It cannot be clarificatory nature as to have retrospectivity. It is made clear that in the 'objects clause' the amendment will take effect from assessment year 2021-22 and subsequent years. It cannot be 'clarificatory' as held by NFAC. The addition be deleted. 3) On the facts and in the circumstances of the case and in law the Ld. NFAC distinguished the verdict of the Hon'ble Supreme Court in CIT v. Alom Extrusion Ltd. 319 ITR 306 saying it was not applicable because court had decided the issue qua employers contribution per S. 43B(b) and not qua employees contribution u/s 36(l)(va) of the Act. Since newly amended law applies from 01-4- 2021 and from A. Y. 2021-22 the NFAC totally erred in distinguishing the Supreme Court judgment (supra). It be held accordingly. 4) On the facts and in the circumstances of the case and in law the levy of interest u/s 234A, 234B and 234C is not justified.”
2. The only issue raised in this appeal is against the confirmation of disallowance of Rs.15,15,686/- made by the Assessing Officer (AO), ADIT(CPC) 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(1) of the Act.
3. Briefly stated facts of the case are that the ld.ADIT(CPC) [AO] made disallowance of Rs.15,15,686/- in the intimation under section 143(1) 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 under A.Y. 2019-20 Ravi Sopan Agarkar Vs. ITO, Ward-8(1), Pune [A] 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 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 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
A.Y. 2019-20 Ravi Sopan Agarkar Vs. ITO, Ward-8(1), Pune [A] 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 under section 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 2018-19, 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 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 under section 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 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
A.Y. 2019-20 Ravi Sopan Agarkar Vs. ITO, Ward-8(1), Pune [A] to be deleted. Accordingly, grounds of appeal raised by the assessee are allowed.
In the result, appeal of the assessee is allowed. Order pronounced in the open Court on 4th August, 2022.