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Income Tax Appellate Tribunal, VISAKHAPATNAM “SMC” BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE
अपीलधथी की ओर से/ Appellant by : None प्रत्यधथी की ओर से / Respondent by : Shri Madhukar Aves, DR सुनवधई की तधरीख / Date of Hearing : 14.09.2023 घोर्णध की तधरीख/Date of Pronouncement : 21.09.2023 आदेश /O R D E R Per Shri Duvvuru RL Reddy, Judicial Member :
This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi vide DIN & Order No.ITBA/NFAC/S/250/2021-22/1041359498(1) dated 23.03.2022, arising out of assessment order passed u/s 143(1) of the Income Tax Act, 1961 (in short ‘Act’) dated 26.02.2020 for the Assessment Year (A.Y.) 2019-20. 2 A.Y.2019-20 Amaravathi Power Associates, Visakhapatnam
Brief facts of the case are that the assessee is a firm, filed it’s return of income on 22.10.2019 for the A.Y.2019-20, declaring a total income of Rs.28,17,660/-. However, the Centralized Processing Centre (CPC) had processed the return of income u/s 143(1) vide it’s order dated 26.02.2020 and disallowed an amount of Rs.14,77,226/- u/s 36(1)(va) r.w.s. 2(24)(x) towards delayed remittance of employees contribution towards EPF and ESI.
3. Aggrieved by the order of the CPC, the assessee preferred an appeal before the CIT(A) and the Ld.CIT(A) dismissed the appeal of the assessee.
Aggrieved by the order of the Ld.CIT(A), the assessee preferred an appeal before the Tribunal by raising the following grounds of appeal :
On the facts and in the circumstances of the case the order of the learned Commissioner of Income Tax (Appeals) erroneous in law and facts of the case.
2. On the facts and in the circumstances of the case the elarned Commissioner ouht to have appreciated that the provisions of section 2(24)(x) read with section 36(1)(va) and Section 43B of the Income Tax Act, 1961, being late deposit of Employees contribution towards ESIC/EPF amounting Rs.14,77,226.00 which has been duly deposited on or before the due date of filing of return of income as per the provisions under section 139(1) of the Income Tax Act, 1961. Employee contribution towards ESI and PF paid after the due date of the respective statute but before the filing of Income Tax Return due date u/s 139(1) is allowed under section 43B and should not be disallowed u/s 36(1)(va).
On the facts and int he circumstances of the case the learned Commissioner ought to have appreciated that amendments brought in Finance Act, 2021 in the provisions of section 36(1)(va) and 43B of the Income Tax Act, 1961 shall be applicable w.e.f. 01.04.2021. Thus, Explanation 2 and Explanation 5 in section 36(1)(va) and section 43B of the Income Tax Act, 1961 respectively shall be deemed to have prospective effect and shall not be applicable for AY 2019-20.
4. The appellant craves leave to add to, alter, amend, substitute, delete, modify all or any of the above grounds. 5. None appeared on behaf of the assessee. The only issue raised in the grounds of appeal is that the AO as well as the Ld.CIT(A) are not justified in disallowing the deposits made by the assessee towards PF / ESI before the due date of filing the return of income u/s 139(1) of the Act, though the same could not be paid within the due dates specified under PF Act and ESI Act and the same ought to have been allowed as deduction u/s 43B of the Act
The Ld.DR relied on the order of the Ld.CIT(A) and pleaded to uphold the order passed by the Ld.CIT(A) and dismiss the appeal filed by the assessee.
I have heard the Ld.DR and perused the material available on record. Now the law is settled after a view had been taken by Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd., in Civil Appeal No.2833 of 2016, order dated 12.10.2022. In the case on hand also, the assessee made remittances before filing the return of income u/s 139(1), but not within the due date specified by the respective PF / ESI Acts. For the sake of clarity and convenience, relevant part of the order of hte Checkmate Services Pvt. Ltd.(supra) is extracted as under : “They have to be deposited in terms of such welfare enactments. It is upon deposit, in terms of those enactments and on or before the due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income is treated as a deduction. Thus, it is an essential condition for deduction that such amounts are deposited on or before the due date.” Since the decision of the Hon’ble Supreme Court pronounced the correct legal position of the allowability of belated payment of PF and ESI under the provisions of the Act, I have no hesitation to come to a conclusion that the disallowance made by the AO as well as the Ld.CIT(A) needs no interference, in view of the decision of the Hon’ble Supreme Court mentioned supra.
In the result, appeal of the assessee is dismissed.
Order pronounced in the open court on 21st September, 2023. (दुव्वूरु आर.एल रेड्डी) (DUVVURU RL REDDY) न्याधयक सदस्य/JUDICIAL MEMBER Dated : 21.09.2023 L.Rama, SPS