WINGS BIOTECH LLP,DELHI vs. ACIT, CIRCLE-44(1), DELHI

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ITA 531/DEL/2023Status: DisposedITAT Delhi07 August 2023AY 2017-183 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal allowed the appeal partly. It held that the disallowance for the deposit made on 16.05.2016 (a Sunday) was incorrect, considering Section 10 of the General Clauses Act. For other delayed deposits, the CIT(A)'s reliance on the Supreme Court decision in Checkmate Services was upheld.

What were the facts?

The assessee challenged a rectification order by the AO and an appeal order by the CIT(A). The dispute involved the disallowance of employee contributions to ESIC and PF, and the charging of interest. A key point was the payment made on a Sunday, which the assessee argued should not be considered late.

What were the issues?

Whether disallowance of employee's share of ESIC/PF contributions is justified when payment is made on the next working day due to a Sunday. Whether the AO erred in charging interest under Sections 234B and 234C.

Which sections of the Income-tax Act were involved?

Section 154,Section 143(1),Section 36(1)(va),Section 37(1),Section 234B,Section 234C,Section 80IC

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Income Tax Appellate Tribunal, DELHI BENCH ‘H’ : NEW DELHI

Before: SH. M. BALAGANESH & SH.ANUBHAV SHARMA

Hearing: 02.08.2023Pronounced: 07.08.2023

The appeal has been preferred by the Assessee against the order dated 19.01.2023 of CIT(A), National Faceless Appeal Centre (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in Order No. ITBA/NFAC/S/250/2022-23/1048913110(1) arising out of an appeal before it against the order dated 07.08.2020 passed u/s 154 r.w.s 143(1) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’) by the ACIT, Circle-44(1), Delhi (hereinafter referred as the Ld. AO).

2.

Heard and perused the record.

531/Del/2023

3.

The assessee has raised following grounds ; “1. That on the facts and circumstances of the case and the provision of law the Ld. CIT (A) has failed to appreciate that impugned order passed U/s 154 of the IT Act, is illegal, bad in law, without jurisdiction and contrary to the facts.

2. That the Ld. CIT (A) has failed to appreciate that the impugned rectification order passed by the Ld AO is against the principles of natural justice and has been passed without affording reasonable opportunity of being heard.

3. That on the facts and circumstances of the case and the provisions of the law, the Ld. CIT (A) has failed to appreciate the fact that the Ld. AO has erred in disallowing the payment of Rs.22,19,980 made on account of employees share to ESIC and PF.

4.

That without prejudice to the above ground, the payment made on account of employees share to ESIC & PF is allowable as business expenses u/s 37(1) of the IT Act.

5.

That the Ld. CIT (A) has failed to appreciate the fact that the learned assessing officer has erred in law in charging of interest u/s 234B and 234C of the IT Act.

6.

That the appellant craves leave to reserve to itself the right to add, alter amend, vary, modify and/or withdraw and ground(s) of appeal at or before the time of hearing.”

4. At the time of arguments it was submitted on behalf of the assessee that in regard to three entries of due date of payment 15.05.2016 the actual date of payment 16.05.2016 being Sunday, Ld. Tax Authorities have failed to appreciate that and made disallowance. In this regard taking into consideration Section 10 of General Clauses Act to the deposit on 16.05.2016, the said deposits cannot be considered to be deposited after due date of deposit.

4.1 Further, it comes up that even otherwise the case of assessee is that assessee unit is entitled for deduction u/s 80C and the income to extent of 25% in the 8th year of operation is allowable for exempt. This aspect however does

531/Del/2023 not appear from the material before the Bench and requires examination of issue.

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