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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri George George K. & Shri Laxmi Prasad Sahu
Per: L.P. Sahu, A.M.
This is an appeal filed by the assessee against the DIN & Order No. ITBA/NFAC/S/250/2021-22/1034444440(1) of the learned CIT(A), NFAC, Delhi dated 27.07.2021 for AY 2019-20.
This appeal was filed belatedly by 23 days. In this regard the assessee has submitted that the appeal was prepared and kept ready for submission before the due date. But due to some technical reasons, the uploading process could not successfully carried out by the Accountant and thereby happened the delay. The assessee prayed that considering the peculiar circumstances prevailed which was beyond the control of the assessee, the delay may be condoned and the appeal may be admitted for hearing. From the record we found that there is reasonable cause for the delay in filing the appeal, therefore, following the decision of the Hon’ble Supreme Court in the case of Collector Land Acquisitionvs Mst. Katiji & Ors dated 19
ITA No. 171/Coch/2021 2 Andian Kandy Rateesh February, 1987 (1987) SCR (2) 387, we condone the delay of 23 days in filing the appeal and admit the appeal for hearing.
The solitary issue raised by the assessee whether the CIT(A) is justified in confirming the disallowance of employees’ contribution to PF and ESI under Section 36(1)(va) of the Income Tax Act, 1961 (the Act).
The brief facts of the case are that the assessee is engaged in proprietary business and filed his return of income for AY 2019-20 on 17.03.2020 declaring total income of Rs.51,11,740/-. The assessment was completed on 28.02.2020 accepting the total income. The AO disallowed an amount of Rs.1,82,654/- on account of delay in the payment of employees PF/ESIC contribution beyond the due date prescribed in the respective Act. Aggrieved, the assessee files appeal before the CIT(A). The CIT(A) has dismissed the appeal of the assessee by observing that the CPC has correctly disallowed as sum of Rs.1,82,654/- being employees contribution to PF amounting to Rs.1,58,256/- and employees contribution to ESI of Rs.24,389/- as the assessee failed to deposit the same within due date specified in the respective Acts by invoking provisions of Section 36(1)(va) r.w.s. 2(24(x of the Act and provisions of Section 43B are not applicable to the employees contribution to PF/ESI. Therefore, I have no reason to deviate from the decision of the AO/CPC. Accordingly, the disallowance made by the AO is confirmed and the Ground of appeal is dismissed. Aggrieved by the order of the CIT(A) the assessee is in appeal before the Tribunal.
The learned A.R. submitted that in view of the decision of the Hon’ble Supreme Court in the case of Rajasthan State Beverages Corporation Ltd., (2017) 84 taxmann.com 185 (SC) and many other decisions by the apex court, no disallowance can be made for deduction of the same under Section 36(1)(va) r.w.s. 2(24(X) of the Act where such payments are deposited within the due date prescribed under Section 43B of the Act i.e. within the due date of filing the return of income under Section 139(1) of the Act. There are many decisions on these lines. The learned A.R. further submitted that all the above facts were before the
ITA No. 171/Coch/2021 3 Andian Kandy Rateesh learned CIT(A), but CIT(A) has passed an order dismissing the appeal relying on certain orders of the High Courts and Supreme Court in favour of Revenue and also pointing out the latest amendments made in the Income Tax Las as per the Finance Act, 2021. It is an approved fact that whenever there are rival decisions on the same issue, the decision in favour of the assessee prevail. If new rules are enacted on this issue as mentioned by the learned CIT(A), even then the fact of specific directions regarding retrospective effect, if any, ordered by the Parliament ought to have mentioned in the appellate order before citing such orders and arguing upon such amendments.
On the other hand, the learned D.R. vehemently supported the orders of the lower authorities. She further submitted that the issue in question is squarely covered by the judgment of the Hon’ble jurisdictional High Court in the case of CIT v. Merchem Limited (supra). She further submitted that the amendment in Finance Act, 2021 is retrospective in nature.
We have heard rival submissions and perused the material on record. The assessee is claiming deduction of delayed remittance of employees’ contribution to PF and ESI, stating that the same has been deposited before the due date of filing return u/s 139(1) of the Act. However, the Hon’ble jurisdictional High Court in the case of CIT v. Merchem Limited (supra) had clearly held that employees’ share of PF and ESI, which was not deposited within the due date under the respective Acts, is not an allowable deduction u/s 36(1)(va) of the Act. The relevant finding of the Hon’ble High Court has been elaborately extracted at pages 8 and 9 of the impugned order of the CIT(A), hence, the same is not reproduced below. Therefore, following the judgment of the Hon’ble jurisdictional High Court in the case of CIT v. Merchem Limited (supra), we hold that since the employees’ contribution to PF and ESI was not deposited within the due date specified in the relevant Acts, the same cannot be allowed as a deduction u/s 36(1)(va) of the Act. It is ordered accordingly.
ITA No. 171/Coch/2021 4 Andian Kandy Rateesh 7. In the result, the appeal filed by the assessee is dismissed.
Dictated and pronounced in the open Court on 28th July, 2022.
Sd/- Sd/- (George George K.) (Laxmi Prasad Sahu) Judicial Member Accountant Member
Cochin, Dated: 28th July, 2022
Copy to:
The Appellant 2. The Respondent 3. The CIT(A) -NFAC, Delhi 4. The CIT - 5. The DR, ITAT, Cochin 6. Guard File By Order
//True Copy// Assistant Registrar ITAT, Cochin n.p.