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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC-II’, NEW DELHI
Before: SHRI H.S. SIDHU
Order dated 21.6.2016 of Ld. CIT(A)-2, New Delhi pertaining to assessment year 2012-13. The ground raised in the Assessee’s appeal reads as under:-
That the Ld. CIT(A)-2, New Delhi has erred on law as well as on facts confirming the disallowance of Rs. 8,40,545/- on account of employees contribution to ESIC and PF considering the same as late payment as per provisions of Section 36(1)(va) of the Income Tax Act, 1961.
That having regard to the facts and circumstances of the case, Ld. CIT(A)-2, New Delhi has erred both on law as well as on facts and circumstances of the case in confirming the chargeability of interest under section 234B of the Income Tax Act, 1961.
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.
2. The brief facts of the case are that the assessee company filed its return for AY 2012-13 on 29.9.2012 declaring income at Rs. 22,82,420/-. The case was processed u/s. 143(1) of the I.T. Act, 1961 and was taken up for scrutiny. Accordingly, Notice u/s. 143(2) of the I.T. Act dated 26.9.2013 and subsequently Notice u/s. 142(1) of the I.T. Act, 1961 alongwith questionnaire were issued to the assessee. In response to the said notices, the Authorised Representative of the Assessee attended the proceedings from time to time and filed the details. During the year under consideration and on perusal of Tax Audit Report, it was observed that the assessee had late deposited the Employees Contribution of ESIC and PF amounting to Rs. 8,40,545/- and accordingly made the contravention of provisions of section 36(1)(va). This amount was qualified by the Auditors of the assessee company in their Tax Audit Report. In reply to the specific query raised by the AO, assessee company has submitted that the Employees Contribution of PF and ESIC was deposited late in some months. AO further observed that assessee company has made the contravention of provisions of Section 36(1)(va) and provision of Section 43B as claimed by the assessee company are not applicable in this case, hence, he disallowed Rs. 8,40,545/- and added the same to the income of the assessee company by completing the assessment at Rs. 31,29,970/- vide his order dated 27.2.2015 passed u/s. 143(3) of the I.T. Act, 1961.
3. Aggrieved with the aforesaid order, assessee preferred an appeal before the Ld. CIT(A), who vide his impugned order dated 21.6.2016 has dismissed the appeal of the assessee by upholding the action of the AO.
Now the Assessee is aggrieved against the impugned order and filed the present appeal before the Tribunal.
Ld. Counsel of the Assessee has stated that lower authorities have wrongly disallowed the addition of Rs. 8,40,545/- on account of employees contribution to ESIC and PF considering the same as late payment as per provisions of Section 36(1)(va) of the Income Tax Act, 1961. However, he stated that since the assessee has deposited the Employees Contribution of PF and ESIC late in some months, hence, the issue in dispute is squarely covered by the similar decision of the Hon’ble Delhi High Court in the case of CIT vs. Aimil Limited reported in (2010) 321 ITR 508 (Del). In this behalf, he filed the copy of the said decision. Therefore, he requested that by following the same reasoning, the addition in dispute may be deleted and accordingly, the appeal of the assessee may be allowed.
On the contrary, Ld. Sr. DR relied upon the orders of the authorities below.
7. I have heard both the parties and perused the records, especially the impugned order passed by the Ld. CIT(A) and the decision referred by the Ld. Counsel of the assessee in the case of CIT vs. Aimil Limited reported in (2010) 321 ITR 508 (Del). I find considerable cogency in the assessee’s counsel in relying upon the aforesaid decision of the Hon’ble High Court of Delhi, because the assessee has deposited the Employees Contribution to ESIC and PF before the due date of filing of return given u/s. 139(1) of the I.T. Act, 1961. I also find that the Hon’ble Delhi High Court in the case of CIT vs. Aimil Limited reported in (2010) 321 ITR 508 (Del) has held as under:-
“We may only add that if the employees’ contribution is not deposited by the due date prescribed under the relevant Acts and is deposited late, the employer not only pays interest on delayed payment but can incur penalties also, for which specific provisions are made in the Provident
Fund Act as well as the ESI Act. Therefore, the Act permits the employer to make the deposit with some delays, subject to the aforesaid consequences.
In so far as the Income Tax Act is concerned, the assessee can get the benefit if the actual payment is made before the return is filed, as per the principle laid down by the Supreme Court In Vinay Cement
(2009) 313 ITR (St.) 1.
We, thus, answer the question in favour of the assessee and against the Revenue. As a consequence, the appeals filed by the assesses stand allowed and those filed by the Revenue are dismissed.”
After perusing the aforesaid decision of the Hon’ble Delhi High Court, I am of the view that the issue in dispute is squarely covered by the aforesaid decision, because in the present case also the assessee has deposited the Employees’ Contribution to ESIC and PF before the due date of filing of return given u/s. 139(1) of the I.T. Act. Therefore, respectfully following the aforesaid decision of the Hon’ble High Court of Delhi in the case of CIT vs. AIMIL Limited, Delhi, the addition in dispute is deleted and accordingly, the ground no. 1 raised by the assessee stands allowed.
With regard to ground no. 2 relating to charging of interest u/s. 234B of the Income Tax Act, 1961 is concerned, the same is consequential in nature, hence, need not be adjudicated.
In the result, the appeal of the Assessee is allowed.
Order pronounced in the Open Court on 20/01/2017.