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2022 (3) TMI 476 - AT - Income TaxEmployees shares towards contribution to PF and ESI - assessee had deposited beyond the due date mentioned in the provisions of the relevant Act but had deposited before the due date of filing of return of income tax - HELD THAT - There is no dispute between the parties regarding the dates of deposit of ESI and PF which clearly are beyond the prescribed date of deposit as applicable under the respective acts. However, there is no dispute between the parties that these deposits were made before the filing of return of income for the relevant assessment year. As in the case of Sagun Foundry (P.) Ltd. 2016 (12) TMI 1479 - ALLAHABAD HIGH COURT has dealt with similar issue and after taking into account the judgment of Hon'ble Supreme Court in the case of CIT vs. Alom Extrusion Ltd 2009 (11) TMI 27 - SUPREME COURT has decided the similar issue in favour of the assessee.
Issues Involved:
1. Disallowance of ?3,31,740/- for employees' contribution to ESIC and EPF under section 43B read with 36(1)(va). 2. Disallowance of ?33,188/- for donation made. Issue-wise Detailed Analysis: 1. Disallowance of ?3,31,740/- for employees' contribution to ESIC and EPF under section 43B read with 36(1)(va): The primary issue revolves around the disallowance of ?3,31,740/- representing employees' contributions towards ESIC and EPF, which were deposited beyond the due date prescribed under the respective Acts but before the due date for filing the income tax return. The assessee contended that this issue is covered in their favor by the Hon'ble Jurisdictional High Court in the case of Sagun Foundry (P.) Ltd. vs. CIT [2017] 78 taxmann.com 47 (Allahabad), which relied on the Supreme Court's decision in CIT vs. Alom Extrusions Ltd. [2009] 319 ITR 306. The learned CIT(A) upheld the addition, relying on decisions from the Gujarat High Court in Gujarat State Road Transport Corporation [2014] 41 taxmann.com 100 and the Kerala High Court in Merchem Ltd. [2015] 61 Taxmann.com 119 (Ker). The learned D.R. emphasized that the Finance Act, 2021, introduced a clarificatory amendment, which is prospective and not retrospective. The Tribunal examined the material on record and found no dispute regarding the dates of deposit, which were beyond the prescribed dates but before the filing of the income tax return. The Tribunal referred to the Allahabad High Court's decision in Sagun Foundry (P.) Ltd. vs. CIT, which dealt with similar issues and decided in favor of the assessee. The Tribunal also noted that several other Tribunals have taken a similar view, including the Lucknow Bench in the cases of Tirubala International Pvt. Ltd. vs. DCIT and Axis Motors Pvt. Ltd. vs. DCIT. Regarding the amendment by the Finance Act, 2021, the Tribunal found it to be prospective, applicable from April 2021, and not retrospective. This was supported by the Allahabad Bench's decision in JCIT, Circle-2, Allahabad vs. Bharat Pumps and Compressors Ltd., which held the amendment to be applicable from the assessment year 2021-22 and subsequent years. The Tribunal concluded that the first issue is decided in favor of the assessee, allowing the deduction for the employees' contribution deposited before the due date for filing the income tax return. 2. Disallowance of ?33,188/- for donation made: The second issue pertained to the disallowance of ?33,188/- for donations made. The assessee argued that this amount was already added back in the computation of income, and hence, further addition by CPC was not justified. The learned D.R. accepted the assessee's contention. The Tribunal reviewed the computation of income and found that the assessee had indeed added back the donation amount. Therefore, the further addition made by CPC was deemed unjustified. The Tribunal decided the second issue in favor of the assessee, allowing the appeal. Conclusion: In conclusion, the Tribunal allowed the appeal of the assessee, deciding both issues in their favor. The disallowance of ?3,31,740/- for employees' contributions to ESIC and EPF was deleted, and the further addition of ?33,188/- for donations was also deemed unjustified and deleted. The order was pronounced in the open court on 08/03/2022.
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