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Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH
Before: Shri Ms. Annapurna Gupta & Shri Siddhartha Nautiyal
Date of hearing : 24-02-2022 Date of pronouncement : 13-04-2022 आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:-
This is an appeal filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals)-2, Vadodara in Appeal no. CIT(A)- 2/10260/2017-18 vide order dated 04/06/2019 passed for the assessment year 2012-13. 2. The assessee has raised following grounds of appeal:- “1. On the facts and in the circumstances of the case and in law, the Ld. CIT (Appeals) erred in confirming the disallowance of Rs, Page No.
2. Newton Engineering & Chemicals Ltd. vs. ACIT (OSD)
8,54,455/- u/s 36(1)(va) of the Income Tax Act without applying sec 43B read with section 36(1)(va) of the Income Tax Act 1961 as per details stated below :
Section 43B read with section 36(l)(va) of the Income Tax Act 1961- Business disallowance - certain deduction to be allowed only on actual payment (PF and ESI contribution) - High Court by impugned order held that amount claimed on payment of PF and ESI having been deposited on or before due date of filling of returns same could not be disallowed under section 43B or under section 36(l)(va) whether SLP against said impugned order was to be dismissed -Held yes [ in favour of assessee.
on the facts and the circumstances of the case and in law, the LD. CIT (Appeals) erred in law and on facts even on merits in adding the amount of Rs, 8,54,455/- on account of delayed deposit of employees contribution of PF and ESI i.e Paid beyond the due date prescribed u/s 36(1) (va) of the act but before the due date of filling of return of income. The said addition may kindly be deleted as per the provision of section 43B r.w.s 36(l)(va) of the Act having regards to the decision
3. The appellant craves to add to , amend or alter the above grounds as may be deemed necessary.
Relief Claimed in appeal The order of the CIT(A) on the above issue of addition of Rs. 8,54,455/- be set aside and addition made by AO shall be deleted.”
The assessee has filed an application seeking adjournment stating that he has to get certain instructions from the client. However, none appeared in person on behalf of the assessee. We note that there is only one issue involved which is disallowance under section 36(1)(va) of the Act on account of late payment of ESIC/PF and since the issue is covered by the jurisdictional Gujarat High Court against the assessee in the case of CIT vs. Page No. 3 Newton Engineering & Chemicals Ltd. vs. ACIT (OSD)
Gujarat State Road Transportation Corporation (2014) 4 taxman.com 100, we think it fit to dispose the case on merits. The application for adjournment is hereby rejected.
The brief facts of the case are that the assessee has filed its return of income on 30-11-2012 declaring total income of Rs. 2,00,69,580/-. In the assessment proceedings, the ld. A.O. completed the assessment on 08-12- 2017 after making addition of Rs. 8,54,455/- on account of late payment of PF contribution of employees in view of jurisdictional Gujarat High Court in the case of CIT vs. Gujarat State Road Transportation Corporation
(2014) 4 taxman.com 100. The ld. A.O. while passing the order held as under:- “As discussed in earlier Para's the assessee has made late payments of ESIC/PF payment of Rs.8,54,455/- u/s 36(l)(va) read with sub- clause (x) of clause 24 of section 2 of Income Tax Act and hence it was required to be disallowed by virtue of jurisdiction Hon 'able Gujarat high court has delivered its judgment in the case of [2014] 4 taxmann.com 100 (Gujarat) HIGH COURT OF GUJARAT Commissioner of Income-tax-II v. Gujarat State Road Transport Corporation dated 26.12.2013. 4.1 It was held that any sum received by the assessee from his employees as contribution to any Provident Fund or Superannuation Fund or any fund set up under the provisions of ESI Act or any other fund for the welfare of the such employees is to be treated as income and on fulfilling the condition as mentioned under section 36(l)(va), the assessee shall be entitled to deduction with respect to such employees' contribution. In this case the assessee has not paid the employee contribution collected from employees within time limit as specified in the ESIC/PF Act. Therefore, Rs.8,54,455/- is hereby disallowed u/s 36(1) (va) read with sub-clause 24 of section 2 of Income Tax Act and added back to the total income of assessee.
Page No. 4 Newton Engineering & Chemicals Ltd. vs. ACIT (OSD)
[Addition of Rs.8,54,455/-] "
In appeal before ld. CIT(A), he dismissed the assessee’s appeal by relying on the Gujarat High Court decision in the case of Gujarat State Road Transportation Corporation (supra). The ld. CIT(A) observed as under:- “Ground No.4 pertains to addition on account of late deposit of employee's PF/ESIC contribution amounting to Rs.8,54.455/-. Employee's contribution to PF and ESIC not deposited within the time is undisputed. Ld.AR has tried to convince the applicability of judgement of Hon'ble Supreme Court in case of Rajasthan State Beverage Corporation Ltd.[2017] 84 taxman.com 185(SC) stating that no disallowance can be made u/s 36(1 )(va) r.w.s 2(24) of the Act because entire contribution was deposited before filing of return of income u/s 139(1) of the Act. I have reminded the Ld. AR that the said order dealt with Sec 43B of the Act and not Sec 36(l)(va) of the Act. Both sections are different for the purpose of implementation. While dismissing revenue appeal filed against the order of Rajasthan High Court, the Hon'ble SC has not discussed applicability of Section 36(1 )(va) r.w.s 2(24)(x) of the Act. Hence, order relied upon by the Ld.AR does not fit given the settings of facts available in this case. As of now, order of the Hon'ble Gujarat High Court in- case of GSRTC of (Supra) is fully applicable and binding. Even the tribunals has been taking consistent view against the assessee citing the rulings passed in case f GSRTC (Supra). The Ld. AR's arguments is against the judicial pronouncement made by Hon'ble jurisdictional High Court and therefore cannot be entertained. Accordingly, addition of Rs.8,54,455/- made u/s 36(l)(va) r.w.s 2(24) stands upheld. Appellant fails on Ground No.4. 7. Ground No. 5,6 & 7 pertain to charging of interest u/s. 234A, 234B and 234D of the Act which is consequential in nature. There being no specified arguments put forth, I cannot give and relief as of now. These Grounds are dismissed.
In the result, the appeal is dismissed.”
Page No. 5 Newton Engineering & Chemicals Ltd. vs. ACIT (OSD)
Before us none appeared on behalf of the assessee. We note that the issue is squarely covered against the assessee by the Jurisdictional High Court decision in case of Gujarat State Road Transportation Corporation (2014) 4 taxman.com 100, wherein it was held that where assessee did not deposit employees' contribution to employees' account in relevant fund before due date prescribed in Explanation to section 36(1)(va), no deduction would be admissible even though he deposits same before due date under section 43B of the Act. Again the Gujarat High Court in the case of Pr. CIT v. Suzlon Energy Ltd. [2020] 115 taxmann.com 340 (Gujarat) held that where assessee had not deposited employees' contributions towards PF and ESI amounting Rs. 15.20 lakhs within prescribed period in law and Assessing Officer by invoking provisions of section 36(1)(va) read with section 2(24)(x) made addition of aforesaid amount to income of assessee, impugned addition made to income of assessee was justified. Respectfully following the above decisions of Jurisdictional High Gujarat High Court, we hold that there is no infirmity in the order passed by ld. CIT(A). We accordingly dismiss the appeal of the assessee.
In the result, the appeal of the assessee is dismissed.