2021 (9) TMI 345 - AT - Income Tax

Addition u/s 36(1)(va) r.w.s. 2(24)(x) - Disallowance of employee s contribution towards EPF - assessee has made remittance pertaining to employee s contribution to EPF beyond the due dates - HELD THAT - Respectfully following the above decision of the Hon ble Jurisdictional High Court in the case of CIT v. Industrial Security Intelligence India Pvt. Ltd. 2015 (7) TMI 1063 - MADRAS HIGH COURT we direct the Assessing Officer to delete the disallowance of EPF contribution and accordingly, the ground raised by the assessee is allowed. Expenses claimed towards lease rent and interest paid to NBFC - Addition on the ground that the tax has not been deducted at source in respect of these payments - HELD THAT - By filing certificates from Karvy Financial Service and Cholamandalam Investment Finance Co. Ltd., the ld. Counsel for the assessee has submitted that the recipients have declared the income and paid tax. Since the above certificates were not produced before the authorities below, we direct the assessee to produce the same before the Assessing Officer for verification and allow the deduction in view of the decision in the case of CIT v. Ansal Land Mark Township P. Ltd. 2015 (9) TMI 79 - DELHI HIGH COURT . Thus, the ground raised by the assessee is allowed for statistical purposes.

Summary

Issues:
1. Disallowance of employee's contribution to EPF.
2. Disallowance of expenses for lease rent and interest paid to NBFC.

Issue 1: Disallowance of employee's contribution to EPF:
The appeal concerns the disallowance of employee's EPF contribution amounting to ?21,77,123 due to belated remittance by the assessee. The Assessing Officer disallowed the amount under section 36(1)(va) r.w.s. 2(24)(x) of the Act. The assessee contended that the remittance was made before the due date for filing the return and should be allowed as a deduction. The ITAT Chennai noted that the decision of the ld. CIT(A) was based on a judgment that was subsequently withdrawn by the Division Bench of the Madras High Court. Referring to various case laws, including the decision in CIT v. Industrial Security & Intelligence India Pvt. Ltd., the ITAT directed the Assessing Officer to delete the disallowance of EPF contribution.

Issue 2: Disallowance of lease rent and interest paid to NBFC:
The second issue pertains to the disallowance of expenses claimed by the assessee for lease rent and interest paid to NBFC amounting to ?37,65,551 due to non-deduction of tax at source. The Assessing Officer disallowed the lease rent as no evidence of the payee obtaining a certificate under section 197 was provided. The ITAT directed the Assessing Officer to reexamine whether the recipient qualifies for exemption under section 10(23BBA) or if the recipient has offered the rental receipt for taxation. Regarding the interest paid to NBFC, the ITAT instructed the assessee to produce certificates from the recipients to verify the declaration of income and tax payment, allowing the deduction based on the decision in CIT v. Ansal Land Mark Township P. Ltd. The appeal was partly allowed for statistical purposes.

In conclusion, the ITAT Chennai partially allowed the appeal, directing the Assessing Officer to delete the disallowance of EPF contribution and reevaluate the disallowance of lease rent and interest paid to NBFC based on the provided evidence.