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Facts
The assessee, a partnership firm, filed its ROI for AY 2018-2019 declaring an income of Rs.59,45,890. The CPC disallowed Rs 40,76,681/- for non-deposit of employee's contribution to PF and ESI. The CIT(A) dismissed the appeal, relying on the Supreme Court judgment in Checkmate Services (P.) Ltd. v. CIT.
Held
The Tribunal observed that the disallowance included employer's contributions, which were paid before the due date of filing the ITR and are eligible for deduction under Section 43B. The employer's contribution is not covered by the Checkmate Services judgment.
Key Issues
Whether the disallowance of employer's contribution towards PF/ESI, when paid before the due date of filing ITR, is justified.
Sections Cited
143(1), 43B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, BANGALORE BENCHES “B”, BANGALORE
Before: Shri Laxmi Prasad Sahu & Shri Prakash Chand Yadav
Asst.Year : 2018-2019 M/s.Blue Moon Enterprises The Income Tax Officer 3rd Cross, St.Ashwini Nagar Ward 1 vs. Haveri – 581 110 Haveri. Karnataka. PAN: AAHFB2506P. (Appellant) (Respondent) Appellant by: Sri.Ravishankar, Advocate Respondent by: Sri.Chinmay Anand Jain, JCIT-DR Date of Date of Hearing : 29.10.2024 Pronouncement: 05.11.2024 O R D E R
Per Prakash Chand Yadav, JM :
The present appeal of the assessee is arising from the order of the learned CIT(A) dated 24thJuly, 2024 and relates to assessment year 2018-2019, having DIN & Order No.ITBA/NFAC/S/250/2024- 25/1066987560(1).
The facts of the case are that the assessee is a partnership firm and engaged in the business of supplying manpower to various entrepreneurs. For the impugned year, the assessee has filed its return of income(ROI) on 04th October, 2018 declaring an income of Rs.59,45,890. The return of income filed by the assessee has been processed u/s.143(1) of the Income-tax Act, 1961 vide order dated 16th October, 2019. The Ld CPC while processing the ROI has
Aggrieved with the order of the learned CPC, the assessee filed number of rectification applications before the lower authorities. However, could not find any positive response. At last the assessee filed an appeal before the ld.CIT(A) challenging the order of the CPC. The appeal filed by the assessee before the ld.CIT(A) has been dismissed by relying the judgment of the Hon’ble Supreme Court in the case of Checkmate Services (P.) Ltd. v. CIT (2022) 143 taxmann.com 173 (SC).
Aggrieved with the order of the CIT(A), the assessee appeared before us and contended that the CPC as well as the CIT(A) has erred in not appreciating that the CPC while making the disallowance of PF/ESI, has included the employer’s contributions also.
The learned Departmental Representative relied upon the orders of the authorities below.
After considering the rival submissions and perusing the material available on record, we observe that it is the case of the assessee that the CPC has wrongly disallowed the employer’s contributions. The learned Counsel for the assessee has drawn the attention of the Bench towards page No.5-15, and page No.17 of the paper book. Perusal of these papers would show that the auditors of the assessee while filing form 3CD has included the sum of employer’s contribution also at Sr. number-20 of Form 3CD, which in our view is not correct. The Tax Auditors should have reported only employee’s contributions at Sr number 20 of Tax Audit Report. It is 2 M/s Blue Moon Enterprises further observed that assessee has paid the employer contribution before the due date of the filing of ITR and hence the assessee is eligible for the deduction of section 43B vis-à-vis employer contribution. It is pertinent to note that the employer contribution is not covered by the judgment of apex court in the case of Checkmate Services (P.) Ltd. (supra). Considering the facts and circumstances of the case, we hereby restore the matter to the file of the A.O for the purpose of verification and direct the A.O relief should be granted to the assessee in respect of employer’s contribution and the disallowance shall be restricted up to sum attributable to Employee’s contributions. Before parting we clarify that the additional grounds raised by the assessee is not tenable and the counsel for the assessee has also not addressed any arguments vis-à-vis the additional grounds. Therefore, the additional grounds are dismissed as not pressed
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 05th November, 2024.