SINGLA FORGING,ROHTAK vs. DCIT, ROHTAK CIRCLE, ROHTAK

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ITA 426/DEL/2018Status: DisposedITAT Delhi19 June 2018AY 2014-152 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 since the PF and ESI contributions were deposited prior to the filing of the return of income under section 139(1), the disallowance was not permissible. The Tribunal relied on the jurisdictional High Court's decision in CIT vs Hemla Embroidery Mills (P.) Ltd.

What were the facts?

The assessee made late deposits of Provident Fund (PF) and ESI contributions. The Assessing Officer (AO) disallowed these amounts, and the Commissioner of Income Tax (Appeals) upheld the AO's decision.

What were the issues?

Whether disallowance of PF and ESI contributions is permissible when deposited before the due date of filing the return of income, even if deposited late.

Which sections of the Income-tax Act were involved?

Section 43B,Section 139(1)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI BENCH “SMC”, NEW DELHI

Before: SH.BHAVNESH SAINI

Hearing: 13.06.2018Pronounced: 19.06.2018

PER BHAVNESH SAINI, JUDICIAL MEMBER

1.

This appeal by the assessee has been directed against the order of Ld.CIT(A), Rohtak dated 11.01.2018 for AY 2014-15, challenging the addition of Rs.3,40,868/- made by the AO by making disallowance on account of late deposit of Provident Fund (in short “PF”) & ESI. The AO noted the relevant details regarding payment on account of contribution of PF & ESI after the due dates at page 3 & 4 of the assessment order and made the addition of Rs.3,40,868/-. Ld.CIT(A) dismissed the appeal of the assessee.

2.

After considering the rival submissions, I am of the view that no addition is permissible. Ld. Counsel for the assessee submitted that the issue is covered in favour of the assessee by the judgment of Hon’ble Punjab & Haryana High Court in the case of CIT vs Hemla Embroidery Mills (P.) Ltd. [2014] 366 ITR 167 ( P & H) in which it was held :-

“The second proviso to section 43B of the Income Tax Act, 1961, omitted by the Finance Act, 2003, with effect from April 1, 2004, was clarificatory in nature and was to operate retrospectively. Thus, the assessee, for the assessment year 2003-04, was entitled to deduction in respect of the employer’s and employee’s contributions to the Employees’ State Insurance and provident fund as the contributions had been deposited prior to the filing of the return under section 139(1).”

3.

He has pointed out that there was a delay in making the payments on account of PF & ESI, however, the contribution has been deposited prior to the filing of the return u/s 139(1) of the Income Tax Act, 1961. The details of the same are mentioned at page 3 & 4 of the assessment order. On going through the same, I am of the view that since payment on account of PF & ESI contributions had been made prior to filing of the return of income u/s 139(1) of the Act, therefore, the issue is covered in favour of the assessee by the jdugement of Jurisdictional Punjab & Haryana High Court in the case CIT vs Hemla Embroidery Mills (P.) Ltd. (supra). The orders of the authorities below are set aside and addition is deleted.

4.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court.

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