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TMI Blog2021 (8) TMI 713X X X X Extracts X X X X X X X X Extracts X X X X ..... wherein the Hon ble High Court after extensively examining the matter and considering the various decisions of the Hon ble Supreme Court and various other High Courts has decided the matter in favour of the assessee. The addition by way of adjustment while processing the return of income u/s 143(1) amounting to ₹ 1,25,431/- so made by the CPC towards the delayed deposit of the employees s contribution towards ESI and PF though paid well before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted as the same cannot be disallowed under section 43B read with section 36(1)(va) of the Act in view of the binding decision of the Hon ble Rajasthan High Court. - Decided in favour of assessee. - ITA. No. 41 & 42/JP/2021 - - - Dated:- 16-8-2021 - Shri Sandeep Gosain, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri Mukesh Khandelwal (C.A.) For the Revenue : Miss. Monisha Choudhary (JCIT) ORDER PER: VIKRAM SINGH YADAV, A.M. These are two appeals filed by the assessee against the orders of the ld. CIT(A) (NFAC), Delhi both dated 17.03.2021 19.04.2021 for the assessment years 2018-19 2019-20 respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per provisions of PF Act, but deposited prior to filing the return under section 139(1) of the income Tax Act, 1961 ignoring the binding judgment of the Honorable jurisdiction High Court of Rajasthan in the case of ITO vs. SBBJ (363 ITR 70). 5. In ITA No. 42/JP/2021 for A.Y 2019-20, the assessee has taken the following grounds of appeal:- 1. That the order passed by ld. CIT(A) is bad in law as he failed to appreciate that disallowance under section 36(1)(va) is highly debatable issue and hence such adjustment is not permissible while processing the return under section 143(1) of the Income Tax Act, 1961. 2. That the ld. CIT(A) has erred in law in sustaining the disallowance made by ld. AO for ₹ 1,46,126/- being the amount collected from employees towards contribution to welfare funds but deposited later than the scheduled dates as per provisions of PF Act, but deposited prior to filing the return under section 139(1) of the income Tax Act, 1961 ignoring the binding judgment of the Honorable jurisdiction High Court of Rajasthan in the case of ITO vs. SBBJ (363 ITR 70). 6. During the course of hearing, the ld AR submitted that the assessee had collected a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made to admit this ground being purely legal in nature and which goes to the root of the matter and is covered with the judgment of the Hon ble Supreme Court in the case of NTPC 229 ITR 383. 9. It was submitted that provisions of section 143(1)(a) allows following types of adjustments to be made while processing the return of income:- i. Any arithmetical error ii. Any incorrect claim, if same is apparent from any information in return iii. Claim of set off of carried forward loss, if the return for the year of loss was furnished beyond stipulated date u/s 139(1) iv. Disallowance of expenditure indicated in the audit report but not taken in return v. Disallowance of deduction claimed u/s 10AA, 80-IA, 80-IAB, 80- IB, 80-IC, 80-ID or 80-IE if return furnished beyond stipulated date u/s 139(1) 10. It was submitted that the adjustment as proposed by CPC can be categorized in point no. ii or point no. iv above. However in point no. iv, it is mentioned that such claim must be as indicated by the auditor. In case of audit report u/s 44AB, the auditor only submits a factual position about contributions of employees towards welfare funds and its deposit into respective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposited after the prescribed date under respective statute. Therefore the action of disallowing such amounts while processing the return is not accordance with law and requires to be reversed. 12. In ground No. 3, the assessee has challenged the sustenance the disallowance made by AO for ₹ 1,25,430/-. It was submitted that the ld. CIT (A) has relied on the case of Hon ble Gujarat High Court in the case of State Road Transport Corporation 366 ITR 170 for sustaining the disallowance made by the CPC while processing the return. The Ld. CIT (A) forgot to take into consideration the reply filed by the assessee on the communication issued by CPC for making the disallowance on account of employees contribution to welfare funds. In the reply filed by the assessee, the assessee had mentioned about the binding judgment of the Hon ble Rajasthan High Court in the case of CIT v/s Udaipur Dugdh Utpadak Sahkari Sangh and CIT v/s SBBJ . The approach so adopted by the ld. CIT (A) is against the law and unjustified. 13. It was submitted that recently, a similar matter came before the Hon ble ITAT, Agra Bench in the case of Mahadev Cold Storage v/s AO, Aligarh (ITA No. 41 42/Agr/2021 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has failed to raise the same before the ld CIT(A) and hence, the same may not be entertained at this stage of the appellate proceedings. It was further submitted that there has been a delay in deposit of employees contribution towards PF and ESI by the assessee and as the same has not been deposited within the stipulated time frame as prescribed by the relevant statue, the same has been rightly disallowed in terms of section 36(1)(va) while processing the return of income u/s 143(1) and has been rightly confirmed by the ld CIT(A) following the decision of the Hon ble Gujarat High Court in case of State Road Transport Corporation. The ld DR has thus relied on the findings of the lower authorities. 16. We have heard the rival contentions and perused the material available on record. On perusal of the audit report submitted by the assessee as part of his return of income, it is noted that the assessee has deposited the employees s contribution towards ESI and PF well before the due date of filing of return of income u/s 139(1) and the last of such deposits were made on 14.04.2018 whereas due date of filing the return for the impugned assessment year 2018-19 was 31. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount actually paid by the assessee on or before the due date admissible at the time of submitting return of the income under Section 139 of the Act in respect of the previous year can be claimed by the assessee for deduction out of their gross total income. It is also clear that Sec.43B starts with a notwithstanding clause would thus override Sec.36(1) (va) and if read in isolation Sec. 43B would become obsolete. Accordingly, contention of counsel for the revenue is not tenable for the reason aforesaid that deductions out of the gross income for payment of tax at the time of submission of return under Section 139 is permissible only if the statutory liability of payment of PF or other contribution referred to in Clause (b) are paid within the due date under the respective enactments by the assessees and not under the due date of filing of return. 22. We have already observed that till this provision was brought in as the due amounts on one pretext or the other were not being deposited by the assessees though substantial benefits had been obtained by them in the shape of the amount having been claimed as a deduction but the said amounts were not deposited. It is per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and circumstances of the case, the addition by way of adjustment while processing the return of income u/s 143(1) amounting to ₹ 1,25,431/- so made by the CPC towards the delayed deposit of the employees s contribution towards ESI and PF though paid well before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted as the same cannot be disallowed under section 43B read with section 36(1)(va) of the Act in view of the binding decision of the Hon ble Rajasthan High Court. 21. Given that we have adjudicated on the merits of the case whereby we have directed to delete the addition so made, the other ground of appeal relating to adjustment while processing the return of income and issue of intimation u/s 143(1) by CPC has become academic in nature and we donot deem it necessary to adjudicate the same. 22. In the result, the appeal of the assessee is allowed. 23. Similarly, in ITA No. 42/JP/2021, both the parties fairly submitted that the facts and circumstances of the case are exactly identical and therefore, following the aforesaid discussion in ITA No. 41/JP/2021, the addition so made amounting to ₹ 1,46,126/- towards ..... X X X X Extracts X X X X X X X X Extracts X X X X
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