2021 (12) TMI 1198 - AT - Income Tax

Delayed employees contribution of ESI and Provident Fund - payment remitted before due date of filing of return - HELD THAT - In the present case, the assessee has remitted the employees contribution in respect of PF ESI beyond due date for payment but within due date of filing of return of income. Thus, we respectfully following the decision of Hon ble Jurisdictional High Court in the case of CIT vs. M/s. Industrial Security Intelligence India Pvt. Ltd., 2014 (10) TMI 1049 - ITAT CHENNAI we allow the appeal filed by the assessee.

Summary

Issues Involved:
1. Disallowance of employees' contribution of ESI and Provident Fund under section 36(1)(va) of the Income Tax Act, 1961.
2. Delay in filing the appeal before the CIT(A) and condonation of the same.
3. Merits of the case regarding the employees' contribution in respect of PF and ESI.

Issue 1: Disallowance of employees' contribution of ESI and Provident Fund under section 36(1)(va) of the Income Tax Act, 1961:
The assessee had paid the employees' contribution of ESI and Provident Fund with a delay but before the due date of filing the return. The Assessing Officer disallowed the same under section 36(1)(va) of the Act. The CIT(A) dismissed the appeal due to a 10-day delay by the assessee. However, the ITAT Chennai, after considering the delay explanation, condoned the delay and referred to the decision of the Hon'ble Jurisdictional High Court which allowed such contributions if paid before the due date of filing the return. Citing precedents, the ITAT allowed the appeal, following the decision of the Hon'ble Jurisdictional High Court.

Issue 2: Delay in filing the appeal before the CIT(A) and condonation of the same:
The delay of 10 days in filing the appeal before the CIT(A) was explained by the assessee, attributing it to circumstances beyond their control. The ITAT Chennai, after reviewing the explanation, found sufficient cause to condone the delay. The ITAT emphasized that delays should be condoned in the interest of justice, especially when the issue is covered by a higher court's decision. Hence, the ITAT condoned the delay and proceeded to dispose of the appeal based on the judgment of the Hon'ble Jurisdictional High Court.

Issue 3: Merits of the case regarding the employees' contribution in respect of PF and ESI:
The ITAT Chennai analyzed the case in light of the employees' contribution to PF and ESI, which were paid after the due date for payment but before the due date for filing the return of income. Relying on the decision of the Hon'ble Jurisdictional High Court, the ITAT allowed the appeal filed by the assessee, as the contributions were made within the due date for filing the return. The ITAT emphasized consistency with previous court decisions and dismissed the Revenue's appeal, finding no substantial question of law to consider.

In conclusion, the ITAT Chennai allowed the appeal filed by the assessee, condoning the delay in filing the appeal and permitting the deduction of employees' contribution of ESI and Provident Fund, in line with the decision of the Hon'ble Jurisdictional High Court.