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Income Tax Appellate Tribunal, “C”, BENCH MUMBAI
Before: SHRI JASON P BOAZ, AM & SHRI RAM LAL NEGI, JM
आदेश / O R D E R PER JASON P BOAZ (A.M): This appeal by the Revenue is directed against the order of the CIT(A)-8, Mumbai dated 19/01/2016 for A.Y.2011-2012. 2. The facts of the case, briefly, are as under:- 2.1. The assessee, a company engaged in the business of Information Technology Services and Human Resourcing Services filed its return of income for A.Y. 2011-12 on 27/09/2011 declaring income of Rs.99,41,528/-. The return was processed u/s.143(1) of the Income Tax Act 1961 (in short ‘the Act’) and the case was subsequently taken up for scrutiny. The assessment was completed u/s.143(3) of the Act vide order M/s. Eyeglobal Technologies Pvt. Ltd., dated 24/02/2014 wherein the income of the assessee was determined at Rs.1,65,58,670/- in view of the following additions / disallowances:-
(i) Disallowance u/s.36(1)(va) – Employees’ contribution to ESIC/PF Rs.62,02,772/- (ii) Penalty Charges Rs. 1,04,198/- (iii) AIR Reconciliation Rs. 3,10,170/- 2.2. Aggrieved by the order of assessment dated 24/02/2014 for A.Y.2011-12 for F.Y.2011-12, the assessee preferred an appeal before the CIT(A)-8, Mumbai, which was allowed vide the impugned order dated 19/01/2016. 3.1. Revenue, being aggrieved by the order of the CIT(A)-8, Mumbai dated 19/01/2016 for A.Y. 2011-12, has preferred their appeal raising the following grounds:- 1. “On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance made u/s.36(1)(va) amounting to Rs.62,02,772/-.” 2. “The appellant craves leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of appeal.” 3. “The appellant prays that the order of CIT(A) on the above ground be set aside and that of the assessing officer be restored.”
3.2. When the case was called for hearing, none was present to represent the case on behalf of the assessee, but the learned DR was present to argue the case for Revenue. We have proceeded to dispose off this appeal with the assistance of learned DR for Revenue and on the basis of material available on record.
M/s. Eyeglobal Technologies Pvt. Ltd., 3.3. The learned DR for Revenue was heard in support of the grounds raised and placed strong reliance on the decision of the Assessing Officer (AO) on this issue. 3.4.1. We have heard the learned DR for Revenue and perused and carefully considered the material on record including the judicial pronouncements cited. The sole issue for consideration in the grounds raised in this appeal is whether or not the order of the learned CIT(A), in deleting the disallowance of Rs.62,02,772/- made by the AO u/s.36(1)(va) of the Act on account of payments in respect of employees contribution to ESIC and PF made after the due dates under those Acts, were in order. The facts of the matter as emanate from the record are that in the course of assessment proceedings that AO observed that the assessee had made payments of employees contribution to ESIC and PF after the due date under those Acts and proceeded to disallow the assessee’s claim u/s.36(1)(va) of the Act. On appeal, the learned CIT(A) observed that the said payments of employees contribution to ESIC and PF were allowable u/s.43B of the Act as the same were paid before the due date for filing the return of income u/s.139(1) of the Act for A.Y.20110-12. In this factual matrix and following the ratio of the decisions of the Hon’ble Bombay High Court in the case of CIT v Hindustan Organic Chemicals Ltd., (ITA No.399 of 2012) (Bom), the learned CIT(A) allowed the assessee’s claim and accordingly deleted the disallowance made by the AO u/s.36(1)(va) of the Act.
M/s. Eyeglobal Technologies Pvt. Ltd., 3.4.2. On an appreciation of the factual and legal matrix of the case as discussed above, we concur with the view of the learned CIT(A) that the payments made by the assessee of employees contribution to ESIC and PF, though belatedly under the respective Acts, but within the due date for filing the return of income, are to be allowed as deduction u/s.43B of the Act, is covered squarely in favour of the assessee by inter alia the decisions of the Hon’ble Apex Court in the case of Alom Extrusions Ltd., (supra) and of the Hon’ble Bombay High Court in the case of Hindustan Organic Chemicals Ltd., (supra). At paras 8,9 of the order, the Hon’ble Bombay High Court has held as under:- 8. The section referred to above viz. section 438 and the amendments thereto came up for consideration before the Hon'ble Supreme Court in the case of Commissioner of Income Tax v/s Alom Extrusions Ltd., reported in (2009) 319 ITR 306 (SC) when the Supreme Court inter alia held that the amendments to the said section brought about by the Finance Act, 2003 with effect from 1st April 2004 were retrospective in nature and would vrd 7 ITXA399112 operate from 1st April 1988. The ITAT, relying upon the aforesaid judgment of the Supreme Court, has dismissed the Revenue's Appeal and confirmed the order passed by the CIT (Appeals). In this view of the matter and in view of the fact that the Supreme Court has expressly held that the amendments to section 438 that were brought about by the Finance Act 2003 are retrospective in nature, we find that the ITAT was fully justified in deleting the addition of Rs.1,82,77,138/- on account of delayed payment of Provident Fund of employees' contribution. We therefore find that no substantial question of law arises on this count as sought to be contended by Mr Malhotra on behalf of the Revenue.
Even otherwise, we fail to understand how this deduction could have been disallowed to the Assessee. Admittedly, the Assessment Year in question is 2006-07. The second proviso to section 438 quoted above was deleted with effect from 1st April 2004 and simultaneously the first proviso was also amended bringing about a uniformity in deductions claimed towards tax, M/s. Eyeglobal Technologies Pvt. Ltd., duty cess and fee on the one hand and contribution to the employees' provident fund, superannuation fund and other welfare funds on the other. These deductions being claimed in the return of income filed for the Assessment year 2006-07, the amendments to Section 43B which came into force with effect from 1st April 2004 would have clearly applied to the Assessee's case. In this view of the matter also, we find that the ITAT was vrd 8 ITXA399/12 fully justified in deleting the addition of Rs.1,82,77,138/- on account of delayed payment of provident fund of employees’ contribution.”