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Income Tax Appellate Tribunal, DELHI BENCH : SMC-1 : NEW DELHI
Before: SHRI R.K. PANDA
BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER Assessment Year: 2018-19 Waverley Paints Pvt. Ltd., Vs. DCIT, 1635-A, Gali No.14/15, CPC, Govindpuri, Bangalore. Kalka Ji, New Delhi. PAN: AAACW0241J (Appellant) (Respondent) Assessee by : Shri Ram Avtar Sharma, CA & Shri Somnath Vashist, CA Revenue by : Shri Om Prakash, Sr.DR Date of Hearing : 03.11.2021 Date of Pronouncement : 16 .11.2021 ORDER
This appeal filed by the assessee is directed against the ex parte order dated 22nd September, 2020 of the CIT(A)-9, New Delhi, relating to Assessment Year 2008-09.
Although a number of grounds have been raised by the assessee, these all relate to the ex parte order of the CIT(A) in confirming the addition of Rs.2,52,217/- made by the AO on account of belated deposit of employees’ contribution to PF and ESI u/s 36(1)(va).
Facts of the case, in brief, are that the assessee is a private limited company engaged in manufacturing of paints. It filed its return of income electronically on 26th September, 2018 declaring the taxable income at Rs.13,67,660/-. The CPC, Bangalore, in the return processed u/s 143(1)(a) of the Act proposed the adjustment of Rs.2,52,217/- on account of belated payment of employees’ contribution to PF and ESI.
Before the CIT(A), although the assessee in the grounds of appeal had mentioned such payments were made before the due date of filing of the return of income, however, due to non-appearance of the assessee, the ld.CIT(A), relying on various decisions including the decision of the Hon’ble Delhi High Court in the case of CIT vs. Bharat Hotels Ltd., reported in 410 ITR 417, upheld the action of the AO on the ground that the assessee failed to deposit the employees’ contribution to PF and ESI before the due dates specified under the said statute.
5. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal.
6. I have considered the rival arguments made by both the sides and perused the record. The only question to be decided in the grounds raised by the assessee is regarding the allowability of employees’ contribution to PF and ESI if deposited after the due date prescribed under the relevant Act, but, before the due date of filing of return of income u/s 139(1) of the Act. Admittedly, the assessee, in the instant case, has deposited the employees’ contribution to PF and ESI after 2
PF and ESI Act, but, before the due date of filing the return of income. I find, the Hon’ble Delhi High Court in the case of PCIT vs. Pro Interactive Service (India) Pvt. Ltd. (supra) has held that ‘the legislative intent was / is to ensure that the amount paid is allowed as an expenditure only when payment is actually made. The Hon’ble High Court has further held that legislative intent and objective is not to treat belated payment of Employee's Provident Fund (EPD) and Employee's State Insurance Scheme (ESI) as deemed income of the employer under the Act. I find, following the above decision the coordinate Bench of the Tribunal in the case of CIT v. Dee Development Engineers Ltd. (supra) has decided the issue in favour of the assessee holding that no disallowance u/s 36(1)(v) r.w.s. Section 2(24)(x) can be made if the employees’ contribution to PF and ESI are deposited after the due date prescribed under the relevant Acts, but, paid before the due date of filing of return. Since the assessee, in the instant case has, admittedly, deposited the employees’ contribution to PF and ESI before the due date of filing of the return of income, therefore, respectfully following the decisions cited (supra), I hold that no disallowance u/s 36(1)(v) r.w.s. Section 2(24)(x) can be made in the instant case. Accordingly, the order of the CIT(A) is set aside and the grounds raised by the assessee are allowed.