ASST CIT 11(3)(1), MUMBAI vs. TRUMAN CONSULTANCY SOLUTIONS P.LTD, MUMBAI

This is an appeal filed by the Revenue against the order of CIT(A)-18, Mumbai dated 25/05/2015 for A.Y.2011-12 in the matter of order passed u/s. 143(3) of the IT Act.

The only grievance of revenue relates to deleting disallowance made by AO on account of employees contribution to PF account.

The CIT(A) has deleted the disallowance after observing as under:- 4.3 I have considered the submissions of the appellant, order of the Assessing Officer and facts of the case carefully. It is noticed that the Assessing Officer has observed that assessee has made late payment of provident fund and ESIC from the date prescribed under the relevant Act. Therefore, the assessee was asked to explain why it may not be M/s. Truman Consultancy Solutions Pvt. Ltd., disallowed. The AR of the appellant has submitted that all the payments were made before filing of the return of income. Therefore, the disallowance made may not be called for. However, the Assessing Officer has not agreed with the argument of the appellant and made disallowance of Rs,94,70,5807- as per the provisions of section 2(24)(x) r.w.s.36(1)(va) of the I.T. Act. On the other hand the AR of the appellant has submitted that the payment of employees contribution to provident fund and ESIC were made late but were paid before the due date of filing of return of income u/s. 139(1) if the Income tax Act. The provisions of section 43B recues the assessee the assessee in the event of payment of relevant expenses on or before the due date of filing of the return of income. To strengthen its view the AR of the appellant has relied on the decision of the Hon'ble Supreme Court in the case of Vinay Cement Ltd, in the case of CIT v. Kichha Sugar Company Ltd and in the case of CIT-4 v Hindustan Organics Chemicals Ltd (supra) From the perusal of the submissions and facts of the case it is clear that the assessee has made payment of employees contribution to P.P. and E.S.I.C. rate as prescribed in the relevant Act. But it also correct and undisputable that the payment was made before filing of the return of income u/s.139(1) of the IT Act Now the question arises whether the Assessing Officer can make disallowance u/s.2(24)(x) r.w.s.36(1)(va) when the payment is made before filing of the income tax return To answer this question the Hon'ble Supreme Court in the case of Vinay Cement Ltd has held that the principle that "insofar as the Income tax Act is concerned, the assessee can get the benefit if the actual payment of the employees contribution to PF is made before the return is filed". Similarly, the Hon'ble Uttarakhand High Court in the case of CIT v.Kichha Sugar Company Ltd has also held that section 43B applies to employees contribution also. It has clearly harmonized the meaning of due date under section 36(1 )(va) to mean due date as per section 43B. The Honorable Courts has considered all the relevant provisions like section 2(24)(x) 36(1)(va) and 43B before coming to the conclusion. The Honorable jurisdictional High Court in the case of CIT vs.Hindustan Organics Chemicals Ltd has held that where the assessee company has made payment of employees contribution towards provident fund the assessee's claim cannot be disallowed on account of delayed payment in view of amendment to section 43B. Keeping in view all these facts and circumstances and the decision of Honorable Courts it is held that since the assessee has made all payments before filing of the returns as per the provisions of section 139(1) of the I.T.Act. Therefore, the facts of the present case are clearly covered by the decision of Honorable Supreme Court and the decision of jurisdictional High Court hence the disallowance made by the Assessing Officer is deleted and the ground of appeal is allowed