DCIT, CHENNAI vs. M/S. SUN BUSINESS SOLUTIONS PVT. LTD., CHENNAI

Brief facts of the case are that the assessee is engaged in business support services and filed its return of income on 28.09.2012 admitting a total income of ₹.98,71,750/-. During the course of assessment proceedings, the Assessing Officer noticed from Form 3CD that the assessee has not paid the employee’s contribution towards ESI and PF within the due dates prescribed as per the respective Acts. The total amount of such delayed payments of employee’s contribution towards ESI and PF are ₹.6,50,976/- and ₹.25,29,655/- respectively. Hence, the Assessing Officer disallowed the delayed payments of employee’s contribution towards ESI and PF under section 36(1)(va) r.w.s. 2(24)(x) of the respective Acts and completed the assessment under section 143(3) of the Act.

On appeal, after considering the submissions of the assessee and by following the decision in the case of CIT v. Industrial Security and Intelligence India Pvt. Ltd. in TCA Nos. 585 & 586 of 2015 & M.P. No. 1 of 2015 dated 24.07.2015, the ld. CIT(A) deleted the addition made on this account.

Aggrieved, the Revenue is in appeal before the Tribunal. The main contention of the ld. DR is that the Department has not accepted the 3 & C.O. No.182/M/16 decision in the case of CIT v. Industrial Security and Intelligence India Pvt. Ltd. (supra) and a Review Petition has been filed before the Hon’ble High Court and therefore, pleaded that the order of the ld. CIT(A) should be reverted and restored that of the Assessing Officer. On the other hand, the ld. Counsel for the assessee strongly supported the order passed by the ld. CIT(A). Moreover, in support of the order of the ld. CIT(A), the assessee has filed Cross Objection against the appeal filed by the Department.

We have heard both sides, perused the materials on record and gone through the orders of authorities below. Since the assessee has not remitted the contribution of employees towards PF and ESI before due date, the Assessing Officer has held that the assessee does not qualify for claiming deduction under section 36(1)(va) of the Act to avail the benefit under section 43B of the Act. By following the decision in the case of CIT v. Industrial Security and Intelligence India Pvt. Ltd. in TCA Nos. 585 & 586 of 2015 & M.P. No. 1 of 2015, the ld. CIT(A) deleted the addition made on this account. In this case, it is not disputed by the Revenue that the assessee has not paid the employees contribution received by it before the due date of filing of the return. Various Courts including the Hon’ble Jurisdictional High Court in the case of CIT v. Industrial Security and Intelligence India Pvt. Ltd. (supra) has held that there can be no deemed addition under section 36(1)(va) r.w.s. 2(24)(x) of the Act, if the impugned amount has been paid

Coming to the Cross Objection, in support of the order passed by the ld. CIT(A), the assessee has filed this cross objection. Since we have dismissed the appeal filed by the Revenue on merits, the Cross Objection filed by the assessee becomes infructuous and accordingly dismissed.

In the result, the appeal filed by the Revenue and Cross Objection filed by the assessee are dismissed.