2022 (4) TMI 495 - AT - Income Tax

Disallowance made under the head of PF/ESI for delayed payment under section 36(1)(va) read with section 2(24)(x) and section 43B - HELD THAT - We find that the issue in hand is covered in favour of assessee by the said order of Vijay Shree Ltd 2011 (9) TMI 30 - CALCUTTA HIGH COURT and in the case of Lumino Industries 2021 (11) TMI 926 - ITAT KOLKATA wherein direct the AO to allow the claim of deduction in respect of employees contribution shares towards ESI, PF, by the assessee before the due date of filing of return u/s 139( 1) Considering the uncontroverted factual matrix on record about the deposit of the contributions before the due date of filing of return u/s. 139(1) of the Act and respectfully following the above decision of the Hon ble Jurisdictional High Court, the disallowance made by the ld.AO and confirmed by the ld. CIT(A) is hereby deleted. Grounds raised by the assessee are allowed.

Issues:

1. Disallowance of contributions towards ESI/PF for delayed payment under section 36(1)(va) read with section 2(24)(x) and section 43B of the Income-tax Act, 1961.
2. Condonation of delay in filing appeals.
3. Interpretation of recent amendments regarding the disallowance of employees' contributions to PF/ESI.
4. Application of judicial precedents in favor of the assessee.

Analysis:

1. The appeals were filed against separate orders disallowing contributions towards ESI/PF due to delayed payments. The issue was whether the disallowance was justified under section 36(1)(va) read with section 2(24)(x) and section 43B of the Income-tax Act, 1961. The Tribunal noted that the contributions were made before the due date of filing the income tax return u/s 139(1) of the Act. The Tribunal relied on judicial precedents, including a judgment of the Hon'ble Jurisdictional High Court, Calcutta, and a recent order of the Co-ordinate Bench of the Tribunal, to rule in favor of the assessee. The disallowance made by the Assessing Officer and confirmed by the CIT(A) was deleted, and all appeals were allowed.

2. The Tribunal addressed the issue of delay in filing appeals and condoned the delay after considering the application for condonation and finding it reasonable. The appeals were taken up for adjudication after condoning the delays of 30 days and 2 days in filing the respective appeals.

3. The Tribunal analyzed recent amendments regarding the disallowance of employees' contributions to PF/ESI. The Tribunal referred to the Finance Bill, 2021, which inserted an amendment disallowing contributions not made within the prescribed time. The Tribunal discussed the prospective nature of the amendment and its impact on the deduction of contributions. The Tribunal considered legislative intent and judicial precedents to interpret the retrospective or prospective application of the amendment, ultimately ruling in favor of the assessee based on the existing legal framework.

4. The Tribunal extensively discussed and applied judicial precedents in favor of the assessee, including the judgment of the Hon'ble Jurisdictional High Court, Calcutta, and the Co-ordinate Bench of the Tribunal. The Tribunal highlighted the binding nature of these precedents and the relevance of previous decisions in similar cases. By aligning with established legal interpretations and precedents, the Tribunal concluded that the disallowance of contributions towards ESI/PF for delayed payments was not justified in the present case.

In conclusion, the Tribunal allowed all appeals, deleted the disallowances made by the Assessing Officer and confirmed by the CIT(A), and upheld the contributions towards ESI/PF as deductible based on the timely payments made before the due date of filing the income tax return. The Tribunal's decision was guided by legal interpretations, judicial precedents, and the specific provisions of the Income-tax Act, 1961.

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