2021 (1) TMI 833 - AT - Income Tax

Disallowance for depositing the employees contribution to PF ESI beyond the prescribed time limited provided in the respective Acts - employees contribution to PF and ESI are governed by the provisions of Section 43B or 36(1)(va) r.w.s. 2(24)(x) - CIT(A) has deleted the disallowances - HELD THAT - As decided in own case Jaipur Vidyut 2020 (8) TMI 127 - ITAT JAIPUR contribution towards Provident Fund and ESI and the said issues have already been decided against the Revenue as relyig on M/S. STATE BANK OF BIKANER JAIPUR AND JAIPUR VIDYUT VITARAN NIGAM LTD. 2014 (5) TMI 222 - RAJASTHAN HIGH COURT - Decided against revenue.

Summary

Issues involved:
1. Disallowance of employees' contribution to PF & ESI beyond prescribed time limit.
2. Applicability of Section 43B over Section 36(1)(va) r.w.s. 2(24)(x) of the Income Tax Act, 1961.

Issue 1: Disallowance of employees' contribution to PF & ESI beyond prescribed time limit:
The appeal was filed by the Revenue against the order of the ld. CIT(A) deleting the disallowance made for depositing the employees' contribution to PF and ESI beyond the prescribed time limit for the A.Y. 2016-17. The assessee, a State Government undertaking engaged in electricity distribution, declared a total loss in its return of income. The AO made additions on account of amounts deposited for employees' contribution towards ESI/PF. The ld. CIT(A) relied on the AO's order, and the assessee argued based on a decision of the Coordinate Bench of the Jaipur ITAT. The ITAT found that the issue was covered in favor of the assessee by various decisions of the jurisdictional High Court, including the case of PCIT vs. Rajasthan Renewable Energy Corporation Limited, and held in favor of the assessee, deleting the disallowances/additions made by the AO.

Issue 2: Applicability of Section 43B over Section 36(1)(va) r.w.s. 2(24)(x) of the Income Tax Act, 1961:
The controversy regarding the applicability of Section 43B over Section 36(1)(va) r.w.s. 2(24)(x) of the Income Tax Act was discussed. The ITAT referred to a previous decision in the assessee's own case for A.Y. 2007-08, where the AO disallowed an amount for delay in depositing employees' contribution towards CPF/GPF/ESI. The ITAT found that the issue was covered by a previous decision of the ITAT Jaipur Bench in the assessee's case for A.Y. 2006-07, upheld by the Jurisdictional High Court. The ITAT upheld the order of the ld. CIT(A) based on the previous decisions, and the appeal of the Revenue was dismissed.

In conclusion, the ITAT Jaipur upheld the order of the ld. CIT(A) in favor of the assessee, deleting the disallowances/additions made by the AO regarding employees' contribution to PF & ESI beyond the prescribed time limit. The ITAT also affirmed the applicability of Section 43B over Section 36(1)(va) r.w.s. 2(24)(x) based on previous decisions, dismissing the Revenue's appeal.