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Facts
The assessee challenged the disallowance of employee contributions to PF/ESI under Section 36(1)(va) for assessment years 2018-19 and 2019-20, as confirmed by the CIT(A). The core dispute was whether the due date for depositing these contributions should be calculated from the month of salary disbursement or the month in which the liability to pay salary arose.
Held
Following precedents from coordinate benches, the Tribunal restored the issue to the Assessing Officer (AO) for re-examination. The AO is directed to consider the assessee's contention that the due date for PF/ESI deposit should be reckoned from the date of actual salary payment and to provide the assessee with an adequate opportunity of hearing.
Key Issues
Whether the due date for depositing employee contributions to PF/ESI under Section 36(1)(va) should be determined based on the actual disbursement date of salary or the month in which the salary liability arises.
Sections Cited
Section 36(1)(va) of the Income Tax Act, 1961
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “B” NEW DELHI
Before: SHRI CHALLA NAGENDRA PRASAD & SHRI NAVEEN CHANDRA
Assessee by Shri Abhishek Jain, CA Revenue by Shri Krishana Ramavat, Sr. DR सुनवाईक�तारीख/ Date of hearing: 11.09.2024 26.11.2024 उ�ोषणाक�तारीख/Pronouncement on आदेश /O R D E R PER C.N. PRASAD, J.M.
These appeals are filed by the assessee against the different orders of the Ld.CIT(Appeals)-NFAC 28.11.2019 & 09.03.2020 for the assessment years 2018-19 and 2019-20 respectively. Assessee has raised the following common grounds for both the assessment years except for the figures: -
1. That having regard to the facts and circumstances of the case, the learned CIT(A) has grossly erred both in law and on facts, in confirming the disallowance of Rs.3,65,35,270/- made by CPC, U/s 36(1)(va) of the Income Tax Act, 1961.
2. That having regard to the facts and circumstances of the case, the learned CIT(A) has grossly erred both in law and on facts, in confirming the disallowance of Rs.3,65,35,270/- made by CPC, U/s 36(1)(va) of the Income Tax Act,1961, despite verifying the facts that the due date for depositing employee’s contribution of PF/ESI should have to be reckoned from the date of actual payment of salary, the alleged delay in payment of ESIC/PF would be substantially ironed out, since they have computed the delay with reference to the month in which the liability to pay salary has arisen to the employer rather than the month in which such salary has been actually paid resulting in alleged delay giving rise to impugned disallowance.
3. That in any case and any view of the matter, action of Ld. CIT (A) in not reversing the action of CPC in making the impugned addition/disallowance/penalty and framing the impugned order which is contrary to law and facts, void-ab-initio, beyond jurisdiction, and without giving adequate opportunity of hearing, by recording incorrect facts and findings and the same is not sustainable on various legal and factual grounds. 4. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.”
Grounds of appeal for AY 2019-20 (ITA No.3551/Del/2023):
1. That having regard to the facts and circumstances of the case, the learned CIT(A) has grossly erred both in law and on facts, in confirming the disallowance of Rs.1,98,63,052/- made by CPC, U/s 36(1)(va) of the Income Tax Act, 1961.
2. That having regard to the facts and circumstances of the case, the learned CIT(A) has grossly erred both in law and on facts, in confirming the disallowance of Rs.1,98,63,052/- made by CPC, U/s 36(1)(va) of the Income Tax Act,1961, despite verifying the facts that the due date for depositing employee’s contribution of PF/ESI should have to be reckoned from the date of actual payment of salary, the alleged delay in payment of ESIC/PF would be substantially ironed out, since they have computed the delay with reference to the month in which the liability to pay salary has arisen to the employer rather than the month in which such salary has been actually paid resulting in alleged delay giving rise to impugned disallowance.
3. That in any case and any view of the matter, action of Ld. CIT (A) in not reversing the action of CPC in making the impugned addition/disallowance/penalty and framing the impugned order which is contrary to law and facts, void-ab-initio, beyond jurisdiction, and without giving adequate opportunity of hearing, by recording incorrect facts and findings and the same is not sustainable on various legal and factual grounds.
4. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other.”
Ld. Counsel for the assessee submits that in so far as employees contribution to PF & ESI is concerned that due date for deposit of PF & ESI shall be reckoned from the month in which disbursement of salary was made. In other words, the Ld. Counsel submits that for computing the period of delay “months” to be taken is the month to be considered is the month in which salary/wages are disbursed by the assessee. For this proposition reliance was placed on the decision of the Kolkata Bench of the Tribunal in the case of Kanoi Paper & Industries Ltd. s. ACIT (75 TTJ 448). Reliance was also placed on the following decisions and submitted that on identical facts the Delhi Bench of Tribunal restored the issue to the file of the Ld. Assessing Officer for examining the due date in the light of the above decisions: -
Sentinel Consultants (P) Ltd. vs. ACIT on 12 June, 2023 [2023] 153 taxmann.com 151; 2. Sai Computers Ltd. vs. ACIT, CPC on 18 October, 2023 IT Appeal Nos. 2862 to 2865 (Delhi) of 2022;
3. Intelligent Communication System India Ltd. vs. ITO, Ward- 12(2), Delhi 03rd Aug., 2023;
4. Rekha vs. ITO, Ward-1(2)(3), Uttar Pradesh 09th Aug., 2023.
Ld. DR placed reliance on the orders of the authorities below.
Heard rival submissions and perused the decisions relied on.
The only contention raised in these appeals is that the due date of deposit of PF & ESI contributions shall be reckoned from the month in which disbursement of salary was made. Reliance was placed on various decisions to support the above contention. We observe that identical issue came up before the coordinate bench in the case of Sentinel Consultants (P) Ltd. vs. ACIT (153 taxamnn.com 4 151), wherein the Tribunal restored the appeal to the file of the Assessing Officer on identical issue and to examine the contention raised by the assessee and in the light of the observations of the Kolkata Bench of the Tribunal in the case of Kanoi Paper & Industries Ltd. vs. ACIT (supra). Similar view has been taken by the coordinate benches referred to above. Thus, respectfully following the said decisions we restored this issue to the file of the Assessing Officer to decide the issue in the light of the observations made by the Tribunal in the case of Kanoi Paper & Industries Ltd. vs. ACIT (supra). Needless to say the Assessing Officer shall provide adequate opportunity of being heard to the assessee, the assessee is at liberty to provide all the necessary information in support of its contention.
In the result, appeals of the assessee are allowed for statistical purpose.
Order pronounced in the open court on 26.11.2024