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TMI Blog2018 (12) TMI 1667X X X X Extracts X X X X X X X X Extracts X X X X ..... ma Ltd., the assessee, is a manufacturer of drugs and fertilizer products. While making the assessment for assessment year 2013-14, the Assessing Officer noticed, inter alia, that the assessee has not paid employees contribution to PF & ESI within the due dates as specified in the relevant Acts, although, the assessee has remitted them before the due date for filing the return under the Income Tax Act. Further, in the assessment made for assessment year 2014-15, the AO made disallowance u/s. 14A r.w.r. 8D. Aggrieved against those orders, the assessee filed appeals before the CIT(A). On the issue of disallowance made u/s. 36(1)(va), the CIT(A) allowed the assessee's appeal relying on the following decisions i. Delhi High Court in AIMIL Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arious Hon'ble High Courts, which held that all contributions to ESI/PF made within the due date u/s 139(1) of the IT Act is deductible u/s 438(b) of the IT Act, when the deduction on account of remittance of employee's contribution to welfare funds is governed by section 36(1)(va) r.w.s 2(24)(x) of the IT Act, wherein it is categorically stated that the employee's contribution should be paid into their account within the due date allowed in the respective Acts viz,, ESI Act and PF Act. 2.2 The ld.CIT(A) ought to have appreciated that the opening words of section 438 of the IT Act make it clear that the provisions of the said section would apply only when a deduction is otherwise allowable under the Income Tax Act and thus the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not credited by the assessee, as an employer, to the respective employee's account in the relevant funds on or before the due date under the PF Act and ESI Act as required in the Explanation to section 36(1)(va) of the IT Act, as is evidenced from the form 3CD filed along with the return of income furnished by the assessee for the A.Y 20 13-14. 2.6 The ld.CIT(A) ought to have appreciated the clarification given by the Central Board of Direct Taxes vide Circular No. 22 of 2015 dated 17, 12.2015, wherein it was clarified that the deductions relating' to employees's contribution to welfare funds are governed by section 36(l)(va) of the IT Act. 2.7 The ICLCIT(A) ought to have taken cognizance to the decision of the Hon'ble Gujarat High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act in the assessment order passed u/s 143(3) of the IT Act, 1961, for AY 2013-14 in the assessee's case. 3. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the order of learned CIT(Appeals) may be set aside and that of the Assessing Officer be restored." The Ld. DR very elaborately argued on the lines of the grounds of the appeal. None was present for the assessee. 5. We heard the Ld. DR and gone through the relevant material. The fact remains that the assessee has paid the employee's contribution to PF & ESI within the due date permitted under Income Tax Act before filing the return, although, it has not paid them within the due dates permitted un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osts. Consequently, M.P.No.1 of2015 is also dismissed." Accordingly, we do not find any reason to interfere with the order of the CIT(A). The Revenue's appeal for assessment year 2013-14 is dismissed. 6. With regard to the disallowance made u/s. 14A, for assessment year 2014-15, the Revenue's grounds of appeal are extracted as under: "1. The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of the case and in law. 2. The Ld. CIT(A) erred in deleting the disallowance of Rs. 11,92,11,436/- made by the Assessing Officer (AO) u/s 14A of the Income Tax Act, 1961, read with Rule 8D of the Income Tax Rules, 1962, in the assessment order for AY 2014-15 passed u/s 143(3) of the ITAct,1961,in the assessee's cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the tax effect involved was below the monetary limits prescribed by CBDT. 2.5 The Ld. CIT(A) ought to have appreciated that the AO has rightly computed the disallowance u/s 14A of the IT Act as provided in Rule 8D of the IT Rule 1962, and as such ought to have confirmed the disallowance made by the AO in the assessment for 2014-15 in the case of the assessee. 3. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the order of learned CIT (Appeals) may be set aside and that of the Assessing Officer be restored." The Ld. DR argued on the lines of the grounds of the appeal. None was present for the assessee. 7. We heard the Ld. DR and gone through the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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