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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC-II’, NEW DELHI
Before: SHRI H.S. SIDHU
The Assessee has filed the Appeal against the impugned
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. 3. 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.
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.
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.
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.
SD/-
(H.S. SIDHU) JUDICIAL MEMBER
Dated: 20/01/2017 *SR BHATNAGAR*