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2022 (2) TMI 774 - AT - Income TaxDelayed Employees contribution to PF and ESI - Amount paid on or before the due date of filing of return u/sec.139(1) - HELD THAT - As decided in M/S ESSAE TERAOKA PVT LTD 2014 (3) TMI 386 - KARNATAKA HIGH COURT there is no distinction between employees and employer contribution to PF, and if the total contribution is deposited on or before the due date of furnishing return of income u/s 139(1) then no disallowance can be made towards employees contribution to provident fund. CIT(A) after considering the relevant details rightly deleted the additions made by the AO - We do not see any reasons to interfere with the order of the CIT(A). Hence, we inclined to uphold the CIT(A) order and dismiss the appeal filed by the revenue.
Issues Involved:
1. Dismissal of the appeal by NFAC due to belated filing. 2. Addition made by CPC for delayed payment of employees' contribution to PF and ESI. Issue-wise Detailed Analysis: 1. Dismissal of the Appeal by NFAC Due to Belated Filing: The assessee challenged the dismissal of their appeal by the National Faceless Appeal Centre (NFAC) on the grounds of it being filed late. The NFAC considered the date of uploading the intimation under section 143(1)(a) on the ITBA portal and not the actual receipt by the assessee through SMS or email. The assessee cited the CBDT Circular No. 10/2021, which extended the period of limitation for appeals due to the COVID-19 pandemic, in line with the Supreme Court's decision. The Tribunal noted that the Supreme Court had directed the exclusion of the period from 15.03.2020 to 14.03.2021 for computing the limitation period for filing petitions and appeals. Respecting these directions, the Tribunal quashed the NFAC's order dismissing the appeal. 2. Addition Made by CPC for Delayed Payment of Employees' Contribution to PF and ESI: The assessee's return was processed under section 154, with CPC disallowing ?3,90,877/- due to delayed payment of employees' contributions to PF and ESI. The assessee argued that the payments were made before the due date for filing the return under section 139(1) of the Income-tax Act, 1961. The Tribunal observed that no debatable issues are permitted for adjustments under section 143(1). It cited the Madras High Court's decision in Redington (India) Ltd., which held that employees' contributions to PF and ESI are allowable deductions if paid before the due date for filing the return. The Tribunal also referenced its own decision in Andhra Trade Development Corporation, which stated that adjustments requiring verification are beyond the scope of section 143(1). On merits, the Tribunal consistently viewed that employees' contributions to PF and ESI are allowable deductions if paid before the due date for filing the return. Citing various judicial precedents, including the Karnataka High Court in Essae Teraoka (P) Ltd. and the Supreme Court's decision in CIT Vs. M/s Vegetables Products Ltd., the Tribunal upheld that there is no distinction between employees' and employer's contributions under section 43B. Therefore, if contributions are paid before the due date of filing the return, no disallowance can be made. The Tribunal concluded that the addition made by CPC under section 154 read with section 143(1) was unsustainable and deleted it. The appeal of the assessee was allowed. Conclusion: The Tribunal allowed both appeals filed by the assessee, quashing the NFAC's dismissal of the appeal due to belated filing and deleting the addition made by CPC for delayed payment of employees' contributions to PF and ESI. The Tribunal reiterated that contributions paid before the due date for filing the return are allowable deductions.
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