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2021 (2) TMI 277 - AT - Income TaxDisallowance u/s 36(1)(va) - delay in remitting employee's contribution to Provident Fund and ESI - As per assessee sum was remitted before the due date of filing of the return of income U/s. 139(1) and therefore, the same should not have been disallowed U/s. 36(1)(va) - Diversified decisions on the issue - HELD THAT - The Hon'ble Supreme Court in the case of CIT vs. M/s. Vegetable Products Ltd. 1973 (1) TMI 1 - SUPREME COURT has held that if there are two views possible on the same issue, the one which is in favour of the assessee should be adopted. Thus decision of the Hon'ble Supreme Court in the case of CIT vs. Alom Extrusions Ltd. 2009 (11) TMI 27 - SUPREME COURT is applicable to both the employer as well as employee's contribution to Provident Fund and ESI and if the assessee has not remitted the amount collected from the employees before the due date of filing of return of income U/s. 139(1) of the Act, then the same has to be disallowed and brought to tax. With these directions, the appeal of the assessee is allowed and the A.O. is further directed to reconsider the issue, if the contrary view is upheld by the Apex Court in the appeals before the Hon'ble Supreme Court on this issue. Assessee appeal is allowed for statistical purposes.
Issues:
Assessee's appeal against the order of Ld. CIT(A)-6, Hyderabad for the Assessment Year 2018-19 regarding disallowance of employee's contribution to Provident Fund and ESI under section 36(1)(va) of the Income Tax Act, 1961. Analysis: 1. Issue of Disallowance under Section 36(1)(va): The assessee contended that the employee's contribution to Provident Fund and ESI was remitted before the due date of filing the return of income under section 139(1) of the Act, and thus should not have been disallowed under section 36(1)(va). However, the Ld. CIT(A) relied on the decision of the Hon'ble Madras High Court to hold the issue against the assessee. The Tribunal noted conflicting decisions by various High Courts and the absence of a decision by the Jurisdictional High Court. Following the principle that if there are two views possible on the same issue, the one in favor of the assessee should be adopted, the Tribunal held that the decision in the case of CIT vs. Alom Extrusions Ltd. is applicable to both employer and employee contributions. Consequently, the disallowance was set aside, and the Assessing Officer was directed to reconsider the issue based on any contrary view by the Apex Court in pending appeals. 2. Judicial Precedents and Interpretation: The Tribunal considered the decisions of various High Courts and emphasized the importance of the decision of the Jurisdictional High Court. Citing the principles laid down by the Hon'ble Supreme Court and the Hon'ble Bombay High Court, the Tribunal concluded that in the absence of a decision by the Jurisdictional High Court, the decision of a non-jurisdictional High Court is also binding. This analysis guided the Tribunal's decision to apply the ruling in the case of CIT vs. Alom Extrusions Ltd. to the present case. 3. Assessee's Grounds of Appeal: The assessee raised multiple grounds of appeal, challenging the addition made under section 36(1)(va) and contending that the expenditure should be allowed as a deduction under section 37(1) of the Act. The Tribunal considered each ground and ultimately allowed the appeal for statistical purposes, emphasizing the importance of adopting a view favorable to the assessee in case of conflicting judgments. In conclusion, the Tribunal's judgment in the present case highlights the significance of judicial precedents, the interpretation of conflicting decisions by High Courts, and the application of principles favoring the assessee in tax matters. The decision serves as a reminder of the importance of legal interpretations and the impact of pending appeals on future assessments.
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