DCIT CORPORATE CIRCLE 1(1), CHENNAI vs. AUTO TECH INDUSTRIES INDIA P LTD., CHENNAI

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ITA 2848/CHNY/2017Status: DisposedITAT Chennai19 September 2018AY 2013-144 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that if employee contributions are paid before the due date of filing the return of income, there can be no deemed addition. The CIT(A)'s deletion of the addition was sustained.

What were the facts?

The assessee collected employee contributions for PF & ESI but remitted them belatedly. The Assessing Officer treated these delayed payments as income and disallowed the deduction.

What were the issues?

Whether belated payment of employee's contribution to PF & ESI attracts disallowance under Section 36(1)(va) read with Section 43B, or if payment before the due date of return filing is sufficient.

Which sections of the Income-tax Act were involved?

Section 36(1)(va),Section 43B,Section 2(24)(x)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: SHRI ABRAHAM P.GEORGE & SHRI DUVVURU R.L.REDDY

Hearing: 29.08.2018

आदेश / O R D E R PER DUVVURU R.L.REDDY, JUDICIAL MEMBER:

1.

This appeal filed by the Revenue is directed against the order of the Commissioner of Income Tax(A)-1, Chennai, in 17 dated 22.09.2017 for the AY 2013-14.

2.

The only effective ground raised by the Revenue is that the Ld.CIT(A) erred in deleting the addition made on account of employee’s contribution on ESI & PF when the same were not paid by the assessee as an employer within the due date of PF Act.

3.

Brief facts of the case are that the assessee is engaged in the business of manufacturing automobile components. The assessment u/s.143(3) has been completed after making disallowance u/s.36(1)(va) to the extent of Rs.73,58,854/-. During the course of assessment proceedings, the AO has noticed that the contribution to PF & ESI collected from the employee’s had been remitted belatedly. The AO treated the delayed payments representing employee’s contribution of PF & ESI to the extent of Rs.66,41,102/- and Rs.7,17,752/- respectively, as the income of the assessee and brought to tax u/s.2(24)(x) r.w.s.36(1)(va) of the Act.

4.

The assessee carried the matter in appeal before the Ld.CIT(A) and challenged the above disallowance. After considering the submissions of the assessee and by relying upon various case laws, the Ld.CIT(A) deleted the additions and allowed the appeal filed by the Revenue.

5.

Aggrieved, the Revenue is in appeal before the Tribunal and challenged the issue with regard to belated remittances of employee’s contribution to PF & ESI. The Ld.DR has submitted that the employee’s contribution of ESI & PF are governed by Sec.36(1)(va) u/s.43B of the Act. Therefore, the order passed by the Ld.CIT(A) to be reversed. On the other hand, the Counsel for the assessee submitted that the Ld.CIT(A) had followed 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. He further submitted that the Ld.CIT(A) held that the assessee is eligible to claim u/s.36(1)(va) of the Act to avail the benefit u/s.43B of the Act. The Ld.CIT(A) relied upon by the decision of the Hon’ble Jurisdictional High Court and allowed the appeal. Therefore, the order passed by the Ld.CIT(A) to be sustained.

6.

We have heard both the sides and gone through the materials placed on record.

7.

In the present case on the hand, the assessee failed to remit the PF & ESI amounting to Rs.73,58,854/- within the due date under PF Act but the assessee had remitted the same within the due date of filing of the return of income. There is no dispute about the above said contention.

We have also perused the ratio laid down 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, wherein, it was held that there could be no deemed addition u/s.36(1)(va) r.w.s.2(24)(x) of the Act if the impound amount paid before the due date of the filing of the return. This 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 sustained the orders passed by the Ld.CIT(A) deleting the addition and thus the ground raised by the Revenue is dismissed.

8.

In the result, the appeal filed by the Revenue is dismissed.

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