CHHATTISGARH STATE POWER GENERATION CO. LTD.,RAIPUR vs. DY. COMMISSIONER OF INCOME TAX (CPC), BENGALURU

आयकर अपीलीय अधिकरण, रायपुर न्यायपीठ, रायपुर IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR श्री रविश सूद, न्याययक सदस्य एवं श्री अरुण खोड़विया, लेखा सदस्य के समक्ष । BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM आयकर अपील सं./ITA No.82/RPR/2021 (नििाारण वर्ा / Assessment Year :2018-2019) Chhattisgarh State Power Vs DCIT(CPC), Bengaluru Generation Co. Ltd., Ground Floor, Vidyut Sewa Bhawan, Dangania, Raipur (C.G.)-492001 PAN No. : AADCC 5772 C (अपीलार्थी /Appellant) (प्रत्यर्थी / Respondent) ..

नििााररती की ओर से /Assessee by : Shri R.B.Doshi, CA राजस्व की ओर से /Revenue by : Shri P.K.Mishra, CIT-DR सुनिाई की तारीख / Date of Hearing : 25/07/2022 घोषणा की तारीख/Date of Pronouncement : 03/08/2022 आदेश / O R D E R Per Arun Khodpia, AM : This appeal is filed by the assessee against the order passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 01.09.2021 for the assessment year 2018-2019, on the following grounds:- 1. On the facts and in the circumstances of the case, CIT(A) erred in confirming action of DCIT(CPC) in making adjustments in intimation u/s 143(1) in respect of issues which are debatable one, i.e on which there are difference of opinions of various judicial forums, whereas AO is permitted to make adjustments while processing return only in respect of arithmetical error or incorrect claim as per law on which there is no dispute. 2. On the facts and in the circumstances of the case, CIT(A) erred in confirming action of DCIT(CPC) in making disallowance of Rs. 4,44,59,090/- by alleging that employees contribution to “Employee Provident Fund (EPF)” paid after the due date specified in the “Employees’ Provident Funds and Miscellaneous Provisions Act, 1952” but before the due specified u/s 139(1) of the Income-tax Act, 1961 by invoking provision of section 36(1)(va) in spite of the fact said contribution was paid on 16.04.2018 as on the due date of

2 ITA No.82/RPR/2021 payment, i.e. on 15.04.2018 and a day before it, there was bank holiday and there are so many judicial pronouncements in which it has been held in clear terms that payment of employees contribution to EPF made on or before the due date of filing of return/s 139(1) is allowable in view of the provisions of Section 43B, as amended vide Finance Act, 2003. 3. On the facts and in the circumstances of the case, CIT(A) erred in confirming action of DCIT(CPC) in making disallowance of Rs.26,01,340/- by alleging that employees contribution to “Employee State Insurance Corporation (ESIC)” paid^6fiier the due date specified in the “Employment State Insurance Act, 1948” but before the due specified u/s 139(1) of the Income-tax Act, 1961 by invoking provision of section 36(1)(va) in spite of the fact that said contribution was paid on 23.03.2018 as against due date of 21.03.2018 due to some unavoidable circumstances and there are so many judicial pronouncements in which it has been held in clear terms that payment of employees contribution to ESIC made on or before the due date of filing of return/s 139(1) is allowable in view of the provisions of Section 43B, as amended vide Finance Act, 2003. 4. On the facts and in the circumstances of the case, CIT(A) erred in confirming action of DCIT(CPC) in not allowing set-off of brought forward unabsorbed depreciation shown in ITR & computation of total income of Rs. 2487,42,94,544/- against income assessed u/s 143(1). 5. The appellant reserves the right to add, amend or alter any ground or grounds of appeal at the time of hearing. 2. Out of the above grounds, ground No.4 has not been pressed by the assessee, therefore, the ground No.4 is dismissed as not pressed. 3. Brief facts of the case are that the assessee is a State Government Undertaking engaged in the business of generation of power in the State of Chhattisgarh and filed its return of income originally on 31.12.2018 through e-filing disclosing total income of Rs. Nil, showing a MAT liability of Rs. 43,33,74,802/-. Later on, the assessee filed a revised return on 30.03.2019 declaring total income of Rs.Nil. i.e. same as original return filed on 31.10.2018 but with a MAT liability of Rs. 56,81,24,342/-.

3 ITA No.82/RPR/2021 Thereafter the Centralized Processing Centre (CPC) processed the return of the assessee u/s.143(1) of the Act on 16.10.2019 at the total income of Rs.4,26,15,51,470/- by making the following disallowances :- Particulars Amount (Rs.) Disallowance out of employees contribution to 4,44,59,090/- “Employee Provident Fund (EPF)” paid after the due date specified in the “Employees’ Provident Funds and Miscellaneous Provisions Act, 1952” but before the due specified u/s 139(1) of the Income-tax Act, 1961 by invoking provision of section 36(1 )(va). Disallowance out of employees contribution to 26,01,340/- “Employee State Insurance Corporation (ESIC)” paid after the due date specified in the “Employment State Insurance Act, 1948” but before the due specified u/s 139(1) of the Income-tax Act, 1961 by invoking provision of section 36(1)(va). Disallowance for Provision of gratuity which was 4,21,44,91,036/- already disallowed by the appellant company in return of income although u/s 43B instead of section 40A(7), as reported in Form No. 3CD. TOTAL 4,26,15,51,466/- 4. Against the above assessment order, the assessee preferred appeal before the CIT(A), the same was disposed off vide order u/s 250 of the Income Tax Act on 01/09/2021 by National Faceless Appeal Centre (NFAC) and confirmed the additions made by the AO except the addition made by the AO on account of provision for gratuity, observing that since the assessee has already disallowed and added back the said sum of Rs.421,44,91,036/- in computation of income filed with revised return on 30.09.2019, therefore double addition is not permissible. In the result appeal was partly allowed by the CIT(A) NFAC. Now, the assessee is further appeal before the Tribunal to challenge the issues decided against it.

4 ITA No.82/RPR/2021 5. First we shall take up the legal ground raised by the assessee being ground No.1 regarding confirming the action of the DCIT(CPC) in making adjustments in intimation u/s.143(1) of the Act in respect of the issues which are debatable one, whereas the AO is permitted to make adjustment while processing the return only in respect of arithmetical error or incorrect claim. 6. On perusal of the intimation issued u/s.143(1) of the Act, dated 16.10.2019, it is found that assessee filed the return of income u/s 139(1) of the Act. Thereafter the Centralized Processing Center (CPC), while processing the return of income u/s 143(1) of the Act, has made adjustments of Rs.4,44,59,090/- towards disallowance of employees contribution to PF and Rs.26,01,340/- towards disallowance of employees contribution to ESI. As per the provisio to Section 143(1)(a) of the Act, the AO is required to give an intimation before making such adjustments, either in writing or in electronic mode. Since in the present case, intimation u/s.143(1) of the Act itself has a mention that a communication dated 29.05.2019 was sent to the email id of the assessee saumitraduby1@gmail.com. It is also mentioned that “as there has been no response/the response was not acceptable, the adjustment(s) as mentioned below are being made to the total income as per the provisions of Section 143(1)(a) of the Act”. Accordingly, the instructions of proviso to Section 143(1)(a) of the Act are duly discharged by the CPC, Bangalore by forming an opinion on the issue after providing reasonable opportunity to the assessee, on which ld. AR of the assessee has not offered any

5 ITA No.82/RPR/2021 comment before us. Hence, the addition made by the CPC is covered by the provisions of Section 143(1)(a)(iv) of the Act, which says that, “disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return.” and cannot be dislodged, therefore, this ground of the assessee is dismissed. 7. Since ground No.1 in which the legal issue raised by the ld. AR has been dismissed, therefore, we are taking the other ground on merits. 8. Ground No.2 & 3 of the appeal are taken together to adjudicate, being disallowance of employees contribution to “Employee Provident Fund (EPF)” and Employee State Insurance Corporation (ESIC) paid after the due date specified in the relevant Acts but before the due specified u/s 139(1) of the Income-tax Act, 1961 by invoking provision of section 36(1)(va). 9. Ld. AR before us filed the copy of Form No.3CA and submitted that since the payment of employees contribution to “Employee Provident Fund (EPF)” and Employee State Insurance Corporation (ESIC) paid after the due date specified in the relevant Acts but before the due specified u/s 139(1) of the Income-tax Act, 1961, the same may please be allowed to the assessee in terms of recent judgments by various hon’ble upper courts and hon’ble coordinate benches of the ITAT. 10. LD DR on the contrary has vehemently relied upon the order of Ld CIT(A) NFAC and various judgments quoted in the said order. 11. On perusal of the orders of the authorities below as well as the relevant documents filed before, we found that the payments of the

6 ITA No.82/RPR/2021 employees contribution to PF & ESI having been made before the due date of filing of the return but after the due date as prescribed under the relevant statute. This issue has already been decided by the coordinate bench of this Tribunal in the case of M/s Ind Synergy Limited in ITA No.312/RPR/2016, vide order dated 30.03.2022 has decided the issue in favour of the assessee holding therein that the amendment made available on the statute vide the Finance Act, 2021 i.e., explanation 5 to section 43B and explanation 2 to section 36(1)(va) are applicable w.e.f.01.04.2021 i.e. from A.Y.2021-22 onwards. Further, this Bench of the Tribunal in the case of M/s Shree Nakoda Ispat Ltd., in ITA No.205/RPR/2018, vide order dated 27.05.2022, has held the ld. CIT(A) has not disputed the facts of the case that the amount has been deposited by the assessee before the due date of filling return of income. So far as employee’s contribution is concerned it is not governed by section 43B but by section 2(24)(x) and 36(1)(va). The Cuttack Bench of the Tribunal in the case of Pashupati Ispat Pvt. Ltd. in ITA No.101/CTK/2021, vide order dated 06.04.2022 after discussing in detail and following the plethora of case laws, has held that it is not disputed that the payment of employees contribution to PF and ESI was made before filing of the return u/s.139(1) of the Act and accordingly deleted the addition made by the AO and confirmed by the CIT(A) on account of delay in depositing the employees contribution to PF & ESI. In view of the above judicial pronouncements as well as factual aspects, we are of the opinion that the payments of the employees contribution to PF & ESI having been made

7 ITA No.82/RPR/2021 before the due date of filing of the return though admittedly after the due date as prescribed under the relevant statute, the same is liable to be allowed in the case of the assessee for the assessment year under consideration. Thus, ground Nos.2 & 3 of the assessee are allowed. 12. In the result, the appeal of assessee is partly allowed. Order pronounced in the open court on 03/08/ 2022. Sd/- Sd/- (RAVISH SOOD) (ARUN KHODPIA) न्यानयक सदस्य / JUDICIAL MEMBER लेखा सदस्य / ACCOUNTANT MEMBER रायपुर/Raipur; ददनाांक Dated 03/08/2022 Prakash Kumar Mishra, Sr.P.S.(on tour) आदेश की प्रनतललपप अग्रेपर्त/Copy of the Order forwarded to : 1. अिीलार्थी / The Appellant- 2. प्रत्यर्थी / The Respondent- आयकर आयुक्त(अपील) / The CIT(A), 3. 4. आयकर आयुक्त / CIT 5. विभागीय प्रविविवि, आयकर अपीलीय अविकरण, रायिुर/ DR, ITAT, Raipur आदेशािुसार/ BY ORDER, गार्ड फाईल / Guard file. 6. सत्यावित प्रयत //True Copy// (Assistant Registrar) आयकर अपीलीय अधिकरण, रायपुर/ITAT, Raipur