SWACH PUNE SEVA SAHKARI SANSTHA MARYADIT,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX, CPC, BENGALURU

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ITA 407/PUN/2021Status: DisposedITAT Pune22 June 2022AY 2018-195 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that for the assessment year in question (prior to the Finance Act, 2021 amendment), the deduction for employee contributions to EPF/ESI deposited after the due date but before the return filing date is allowable. The addition made by the AO was therefore directed to be deleted.

What were the facts?

The Assessing Officer disallowed Rs. 7,92,095/- for late deposit of employees' share of EPF and ESI. The assessee had deducted these amounts and deposited them after the statutory due dates but before the due date for filing the return of income.

What were the issues?

Whether disallowance of employee's contribution to EPF/ESI is warranted when deposited after the due date under the respective acts but before the due date for filing the return of income, for AY 2018-19.

Which sections of the Income-tax Act were involved?

Section 36(1)(va),Section 139(1),Section 43B

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, PUNE BENCH, ‘B’ PUNE

Before: SHRI R.S. SYAL & SHRI S.S. VISWANETHRA RAVI

For Appellant: Shri Kiran Sanmane
For Respondent: Shri M.G. Jasnani

आदेश / ORDER

PER R.S. SYAL, VP :

1.

This appeal by the assessee is directed against the order dated 27-07-2021 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 year 2018-19.

2.

The only issue raised in this appeal is against the confirmation of disallowance of Rs.7,92,095/- made by the Swach Pune Seva Sahakari Sanstha Maryadit Assessing Officer (AO) u/s.36(1)(va) of the Act on account of late deposit of the Employees’ share of EPF and ESI etc.

3.

Briefly stated, the facts of the case are that the AO made disallowance of Rs.7,92,095/- in the intimation u/s.143(1) of the Act on the ground that the assessee late deposited the employees’ share of EPF and ESI etc. The ld. CIT(A) affirmed the disallowance.

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. 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.

Swach Pune Seva Sahakari Sanstha Maryadit

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 2018-19, 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 Swach Pune Seva Sahakari Sanstha Maryadit question was admittedly deposited before due date u/s 139(1) of the Act. The addition is therefore, directed to be deleted.

6.

In the result, the appeal is allowed. Order pronounced in the Open Court on 22nd June, 2022.

Sd/- Sd/- (S.S. VISWANETHRA RAVI) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; िदनांक Dated : 22nd June, 2022 सतीश आदेश की �ितिलिप अ�ेिषत/Copy of the Order is forwarded to: अपीलाथ� / The Appellant; 1. ��थ� / The Respondent 2. 3. NFAC, Delhi 4. The CIT concerned 5. DR, ITAT, ‘B’ Bench, Pune गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune

Swach Pune Seva Sahakari Sanstha Maryadit

Date 1. Draft dictated on 21-06-2022 Sr.PS 2. Draft placed before author 22-06-2022 Sr.PS 3. Draft proposed & placed before JM the second member 4. Draft discussed/approved by JM Second Member. 5. Approved Draft comes to the Sr.PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order. *

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