2021 (11) TMI 1043 - AT - Income Tax

Late payments towards EPF and ESI u/s 36(1)(va) r.w.s. 2(24)(x) - HELD THAT - Since the facts involved in the present case are identical to the facts involved in the case of Mohangarh Engineers and Construction Company Vs. DCIT 2021 (8) TMI 563 - ITAT JODHPUR and in the case of Bikaner Ceramics Private Limited Bikaner Vs. ADIT CPC Bangaluru 2021 (9) TMI 1319 - ITAT JODHPUR wherein addition deleted as the said deposits were made prior to filing of return of income u/s 139(1) - So respectfully following the aforesaid referred to order the disallowances sustained by the Ld. CIT(A) are deleted. - Decided in favour of assessee.

Summary

Issues Involved:
1. Disallowance of employees' contribution to PF and ESI under Section 36(1)(va) read with Section 2(24)(x) of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Disallowance of employees' contribution to PF and ESI under Section 36(1)(va) read with Section 2(24)(x) of the Income Tax Act, 1961:

The assessee challenged the disallowance of ?11,44,759/- made by the Assessing Officer (A.O.) due to late payments towards Employees' Provident Fund (EPF) and Employees' State Insurance (ESI) under Section 36(1)(va) of the Income Tax Act, 1961. The payments were made before filing the return of income under Section 139(1) of the Act, but after the due dates prescribed under the respective statutes. The Commissioner of Income Tax (Appeals) [CIT(A)] sustained the disallowance.

The assessee contended that the issue was covered by the common order dated 27/09/2021 passed by the ITAT, Jodhpur Bench, in similar cases, where it was held that such contributions, if paid before the due date of filing the return of income under Section 139(1), could not be disallowed.

The Tribunal considered the submissions and perused the material on record. It was noted that identical issues had been adjudicated by various Benches of the ITAT, including the ITAT Kolkata Bench in the case of Harendra Nath Biswas vs. DCIT (ITA No. 186/Kol/2021), where it was held that the amendment brought by the Finance Act, 2021, effective from 01.04.2021, was not retrospective. Therefore, the law laid down by the jurisdictional High Court would apply, and contributions made before the filing of the return of income under Section 139(1) were allowable.

Similarly, the ITAT Hyderabad Bench in the case of Salzgitter Hydraulics Private Ltd vs. ITO (ITA No. 644/Hyd./2020) held that disallowances under Sections 36(1)(va) and 43B were not sustainable if contributions were made before the due date of filing the return of income under Section 139(1), despite being after the due dates prescribed under the respective statutes.

The Tribunal also referred to the decision of the Hon'ble Rajasthan High Court in CIT vs. State Bank of Bikaner & Jaipur, where it was held that contributions to PF and ESI paid before the due date of filing the return of income under Section 139(1) could not be disallowed under Section 43B or Section 36(1)(va).

Following these precedents, the Tribunal concluded that the disallowance made by the A.O. and sustained by the CIT(A) was not justified. The contributions were made before the due date of filing the return of income under Section 139(1), and thus, the disallowance was deleted.

Conclusion:

The appeal of the assessee was allowed, and the disallowance of ?11,44,759/- was deleted. The Tribunal emphasized that contributions to PF and ESI made before the due date of filing the return of income under Section 139(1) could not be disallowed, even if made after the due dates prescribed under the respective statutes.