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Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI ABRAHAM P.GEORGE & SHRI DUVVURU RL REDDY
आदेश / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER:
This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax(A)-1, Coimbatore, dated 29.06.2017, for the AY 2013-14.
The assessee has raised only one effective ground. The Ld.CIT(A) has erred in disallowing the amount of Rs.35,44,777/- on account of belated remittances of employee’s contribution towards PF as per Sec.36(1)(va) of the Act, though, the same was paid before filing of the return of income as contemplated u/s.43B of the Act.
Brief facts of the case are that the assessee is a private Ltd., Co., filed its return of income for the AY 2013-14 on 29.09.2013 declaring total income of Rs. NIL. The return was processed u/s.143(1). The case was selected for scrutiny under CASS and the assessment was completed on 20.01.2016 u/s.143(3) of the Act. The assessee collected employee’s PF contribution for payment to the PF Authorities and the amount was so collected was not paid to the PF Authorities within the due date specified in PF Account, though it was paid before the due date of filing the return of income under Income Tax Act, 1961. During the course of the assessment proceedings, the AO had proposed for disallowance of the delayed remittances of ESI and PF collected from its employees during the financial year corresponding to the AY 2013-14. The AO not satisfied with the reply of the assessee preferred to disallow a sum of Rs.35,44,777/- and treated the same as income of the assessee and brought to tax u/s.2(24)(x) r.w.s.36(1)(va) of the Act.
The assessee carried the matter in appeal before the Ld.CIT(A), after considering the submissions of the assessee, the Ld.CIT(A) dismissed the appeal without assigning any proper reasons.
On being aggrieved, the assessee preferred an appeal before the Tribunal and challenged the issue with regard to belated remittance of employee’s contribution towards PF & ESI.
Ld.Counsel for the assessee submitted that the said amount was paid before filing of the return of income as contemplated u/s.43B of the Act. Therefore, the said amounts cannot be treated as income u/s.2(24)(x) of the Act and the same has to be allowed as deduction u/s.43(b) of the Act. The assessee also relied on the decision of the Hon’ble Jurisdictional High Court in the case of CIT vs. Industrial Security & Intelligence India Pvt. Ltd. in TCA No.585 & 586 of 2016 & MP No.1 of 2015 dated 24.07.2015.
Per contra, the Ld.DR submitted that the assessee has not remitted the contribution of employee’s to PF & ESI before the due date under PF Act. The AO as well as the Ld.CIT(A) held that the assessee does not qualify for claiming deduction u/s.36(1)(va) of the Act to avail the benefit u/s.43(b) of the Act. Therefore, the orders passed by the Ld.CIT(A) be confirmed.
We have heard both the sides and gone through the materials placed on record.
We have perused the case law by the assessee counsel rendered in the case of CIT vs. Industrial Security & Intelligence India Pvt. Ltd., as mentioned supra, the relevant portion of the order of the Hon’ble Jurisdictional High Court is reproduced here under:
"5. Heard both sides. Perused orders of lower authorities and the decisions relied on before us. It is not in dispute that all these payments of provident fund Rs.16,20,571/- and ESI Rs.17,51,490/- were made beyond the grace period/due date allowed under Provident Fund & ESI Acts but before due date for filing of income-tax return. This issue has been decided in favour of the assessee by various High Courts following the decision of the Hon'ble Supreme Court in the case of CIT Vs. Alom Extrusions Ltd. (319 ITR 306), wherein the Hon'ble Supreme Court held that omission of second proviso to section 43B and amendment of first proviso by Finance Act, 2003 are curative in nature and are effective retrospectively and thus with effect from 1.4.1988 i.e. the date of insertion of first proviso. The co-ordinate Bench of this Tribunal considering a similar issue in the case of M/s.Venkateswara Electrical Industries P. Ltd. Vs. DCIT (supra) following the decision of Hon'ble Delhi High Court in the case of CIT Vs. Amil Ltd. (321 ITR 508) held that even the employees contribution to provident fund is to be allowed as deduction if it is paid within due date for filing of return. While holding so, the Tribunal observed as under:-
"6. We have heard the submissions made by the representatives of both the sides and have perused the orders of the authorities below, as well as the judgments/decisions relied on by the ld. Counsel for the assessee. It is an un-disputed fact that there has been delay in remittance of employees contribution of ESI and Provident Fund in both the AYs i.e., 2008-09 & 2009-10. It is equally un-disputed that the assessee has deposited the amount towards employees contribution of ESI and Provident Fund before the due date of filing of return. The Hon'ble Delhi High Court in the case of Cit Vs. Amil Ltd., reported as 321 ITR 508 has held that if the assessee had deposited employees contribution towards Provident Fund and ESI after due date as prescribed under the relevant Act but before the due date of filing of return under the Income Tax Act, no dis-allowance could be made in view of the provisions of section 43B as amended by the Finance Act, 2003. The decision of the Hon'ble Delhi High Court has been followed by the co-ordinate bench of the Tribunal in the case of JCIT Vs. M/s.S.M.Apparels (P) Ltd. (supra). The Tribunal has been consistently following the view taken by the Hon'ble Delhi High Court. Accordingly, we hold that the assessee is entitled to claim expenditure on employee's contribution towards ESI and Provident Fund for both the AYs. Accordingly, both the appeals of the assessee are allowed."
Upon perusal of the above said decision, one thing is clear that if the assessee had remitted the employee’s contribution within the due date for filing of the return of income under Income Tax Act, no disallowance could be made in view of the provisions of Sec.43(b) as amended by Finance Act, 2003. In the present case, there is no dispute though the assessee has remitted the employee’s contribution within the due date for filing of the return of income. The Tribunal has also followed the above decision of the Hon’ble Jurisdictional High Court in deciding the similar issue in various cases. In view of the above, we set-aside the order passed by the Ld.CIT(A) and the ground raised by the assessee is allowed.
In the result, the appeal filed by the assessee is allowed.