2021 (10) TMI 915 - AT - Income Tax

Disallowance u/s. 36(i)(va) - employees contribution to PF while processing return u/s. 143(1) - contribution paid beyond the due date prescribed under the ESI Act but before the due date prescribed u/s. 139(1) - Scope of amendment of section 43B - HELD THAT - Hon'ble Karnataka High Court in the case of CIT Vs. Spectrum Consultants India Pvt. Ltd. 2014 (2) TMI 127 - KARNATAKA HIGH COURT wherein it was held that the contributions, if paid before the due date prescribed u/s. 139(1) of the Act, the same is allowable u/s. 36(1)(va) of the Act since the provisions of section 43B of the Act override section 36(va). Also in the case of M/s. Essae Teraoka Pvt. Ltd. Vs. DCIT 2014 (3) TMI 386 - KARNATAKA HIGH COURT supports the case of the assessee. There should not be any dispute that the decision rendered by the jurisdictional High Court is binding on all authorities below it. Hence, the Ld CIT(A) was not justified in placing reliance on the decision rendered by non-jurisdictional High Court, when there is a decision of jurisdictional High Court on the very same issue. An identical issue in the case of Nirmal Enviro Solutions Pvt. Ltd. 2021 (10) TMI 844 - ITAT BANGALORE relating to assessment year 2018-19, wherein the Tribunal following the decision rendered by another coordinate bench in the case of the Continental Restaurant Caf Company Vs. ITO 2021 (10) TMI 843 - ITAT BANGALORE has held that disallowance u/s. 36(1)(va) r.w.s. 43B of the Act cannot be made for assessment year 2018-19 - Thus we direct the A.O. to delete the impugned disallowance. - Decided in favour of assessee.

Summary

Issues:
Disallowance of employees' contribution to PF under section 36(1)(va) of the Income-tax Act, 1961 for assessment year 2018-19.

Detailed Analysis:

Issue 1: Disallowance of employees' contribution to PF
- The appellant challenged the disallowance of ?35.06 lakhs under section 36(1)(va) of the Act related to employees' contribution to PF.
- The appellant remitted the ESI contribution after the due date but before the due date for filing the return of income u/s. 139(1) of the Act, hence no disallowance was made by the appellant.
- The Ld. CIT(A) confirmed the disallowance based on a decision by the Hon'ble Gujarat High Court, contrary to the appellant's reliance on the Karnataka High Court's decision.
- The Tribunal noted that decisions by jurisdictional High Courts are binding on all authorities below, and as per Karnataka High Court rulings, the disallowance was not justified.
- Referring to a similar case, the Tribunal held that disallowance under section 36(1)(va) with section 43B could not be made for the assessment year 2018-19.
- The Tribunal directed the Assessing Officer to delete the disallowance, following the decisions of the jurisdictional High Court and previous Tribunal rulings.

In conclusion, the Tribunal allowed the appeal, setting aside the Ld. CIT(A)'s order and directing the deletion of the disallowance of employees' contribution to PF for the assessment year 2018-19. The Tribunal emphasized the binding nature of decisions by jurisdictional High Courts and the applicability of previous Tribunal rulings in similar cases. The judgment highlighted the importance of timely contributions and the interpretation of relevant provisions of the Income-tax Act, ultimately favoring the appellant's position based on legal precedents and statutory provisions.