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2022 (2) TMI 809 - AT - Income TaxNon-deposit of the employees' contribution towards PF/ESIC before the prescribed due dates - disallowance u/s 36(1)(va) - HELD THAT - We find that Hon'ble Delhi High Court in the case of CIT vs. AIMIL Ltd. 2009 (12) TMI 38 - DELHI HIGH COURT has held that no disallowance under section 36(1)(va) of the Act is called for when the amounts are deposited before filing the return of income. As far as the applicability of amendment made by Finance Act 2021 is concerned, we find that the Co-ordinate Bench of Tribunal in the case of Indian Geotechnical Services 2021 (9) TMI 182 - ITAT DELHI has held that amendment made by Finance Bill 2021 shall take effect from 1st April 2021 and will accordingly apply to A.Y. 2021-22 and subsequent years. In the present case assessment year involved is 2018-19 and therefore following the aforesaid decision in the case of Indian Geotechnical Services (supra), we are of the view that the amended provisions would have no application to the case under consideration. Thus we are of the view that no addition u/s. 36(1)(va) of the Act is called for in the present case. Therefore we direct the AO to delete the addition. Thus the ground of assessee is allowed.
Issues:
Disallowance of delayed deposit of PF/ESIC dues under section 36(1)(va) of the Act for Assessment Year 2018-19. Detailed Analysis: 1. Disallowance of PF/ESIC Dues: The appeal was filed against the order of the National Faceless Appeal Centre (NFAC) regarding the disallowance of ?33,93,790 under section 36(1)(va) of the Act for delayed deposit of PF/ESIC dues. The assessee, engaged in providing security guard services, had filed the return of income for A.Y. 2018-19, declaring total income of ?33,26,184. The Central Processing Centre (CPC) determined the total income at ?65,69,970 after disallowance. The assessee contended that the contributions were deposited with the appropriate authorities before filing the return, albeit with slight delays ranging from 1 to 2 days. The appellant argued that no disallowance was warranted under section 36(1)(va) and cited precedents such as CIT vs. AIMIL Ltd. The appellant also challenged the applicability of the amendment made by Finance Act 2021, asserting that it would not apply to the assessment year in question. The Delhi Tribunal's decisions in the cases of Indian Geotechnical Services and Azamgarh Steel & Power Pvt. Ltd. were cited to support the appellant's position. 2. Tribunal's Decision: After hearing both parties and examining the facts, the Tribunal noted that the contributions were indeed deposited before filing the return of income. Citing the decision of the Hon'ble Delhi High Court in CIT vs. AIMIL Ltd., the Tribunal concluded that no disallowance under section 36(1)(va) was warranted in such circumstances. Regarding the amendment by Finance Act 2021, the Tribunal followed the decision in the case of Indian Geotechnical Services, clarifying that the amendment would not apply to the assessment year 2018-19. The Tribunal emphasized the principle that when conflicting judgments exist, the one favoring the assessee should prevail, as established in the case of Vegetable Products Ltd. Based on these considerations, the Tribunal directed the Assessing Officer to delete the addition, allowing the appeal of the assessee. 3. Outcome: Ultimately, the Tribunal allowed the appeal of the assessee, ruling in favor of the appellant's contention that no disallowance under section 36(1)(va) of the Act was justified for the delayed deposit of PF/ESIC dues. The decision was based on the timely deposit of contributions before filing the return of income and the inapplicability of the Finance Act 2021 amendment to the assessment year in question. The order was pronounced in the open court on 09.02.2022, with the direction to delete the addition made by the Assessing Officer.
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