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TMI Blog2022 (5) TMI 848X X X X Extracts X X X X X X X X Extracts X X X X ..... PF and ESI is allowable deduction if the same is paid before the due date of filing the return of income - See M/S. EASTERN POWER DISTRIBUTION COMPANY OF A.P. LTD. AND VICA-VERSA [ 2016 (9) TMI 1040 - ITAT VISAKHAPATNAM] - Decided in favour of assessee. - I.T.A. No. 123/Viz/2021 - - - Dated:- 7-4-2022 - SHRI DUVVURU RL REDDY , HON BLE JUDICIAL MEMBER And SHRI S BALAKRISHNAN , HON BLE ACCOUNTANT MEMBER For the Appellant : I. Kama Sastry , AR For the Respondents : S. P. G. Mudaliar , DR ORDER Per Shri Balakrishnan S , Accountant Member This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-1 [for short, CIT(A) ], National Faceless Appeal Centre (NFAC), Delhi in DIN Order No. ITBA/NFAC/S/250/2021-22/1033600787(1) dated 22.06.2021 for the Assessment Year (A.Y.) 2018-19. 2. Brief facts of the case are that the assessee, a registered firm, filed its return of income, declaring total income of Rs. 44,573/-. However, the Centralized Processing Centre (CPC) has made an addition of Rs. 32,515/- u/s 36((1)(va) of the Income Tax Act, 1961 (in short 'Act') on account of delayed payment of employees' contrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , modify, delete any of the above, at the time of hearing or before. 5. The Ld. DR accepted the fact that payment has been made before due date of filing the return of income. 6. We have heard both the parties and perused the material placed on record. In the instant case, there is no dispute that the return was processed u/s. 143(1) and there was no scrutiny assessment made u/s. 143(3) of the Act. It is settled issue that no debatable issues are permitted to be made adjustments u/s. 143(1) of the Act. In the instant case, what was added in the intimation u/s. 143(1) was the employees contribution to PF. Hon'ble Madras High Court in the case of Redington (India) Ltd. held that employees contribution to PF and ESI is also allowable deduction, if, the same is paid before the due date for filing the return of income. This Tribunal in the case of Andhra Trade Development Corporation in I.T.A. No. 434/Viz/2019 dated 05.05.2021 held that debatable issues are not permitted to be made adjustments while processing the return of income u/s. 143(1) of the Act. For the sake of clarity and convenience, we extract para No. 6 of the order in Andhra Trade Development Corporation which r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the orders of the authorities below. The A.O. made additions towards belated payment of employees' contributions to PF. According to the A.O., employees' contribution to provident fund is deductible under the provisions of section 36(1)(va) of the Act, if the same is paid on or before the due date specified under the provident fund Act. The A.O. further was of the opinion that in view of the clear provisions of section 2(24)(x) r.w.s. 36(1)(va) of the Act, any recovery from employees towards provident fund contribution is deemed to be income of the assessee, if the employer not paid the same to the provident fund account of the employee within due date specified under the provisions of PF Act. It is the contention of the assessee that second proviso to section 43B of the Act provides that no deduction shall be allowed unless such sum is actually been paid on or before due date as specified in explanation to 36(1)(va) of the Act which was omitted by the Finance Act, 2003 w.e.f. 1.4.2004 and accordingly, there was no special provision regarding employees' contribution to PF. It is further contended that as per the amended provisions of section 43B of the Act, any sum pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, it is clear that the Provident Fund Act does not differentiate employees and employer contribution and contribution means both employees and employer contribution under the PF scheme. 7. Section 43B of the Act provides for certain deductions to be allowed only on actual payment basis. Sub clause (b) of section 43B of the Act covers any sum payable by the assessee as an employer by way of contribution to any Provident fund or superannuation fund or gratuity fund or any other fund for the welfare of the employees. The proviso to section provides that any sum paid by the assessee on or before the due date of furnishing return of income u/s. 139(1) of the Act, then no disallowance can be made under the provisions of section 43B of the Act. A careful consideration of section 43B of the Act, it is clear that an extension is granted to the assessee to make the payment of PF contributions or any other fund till the due date of furnishing return of income u/s. 139(1) of the Act. Therefore, in our opinion, there is no difference between employees and employer contribution to PF and if such contribution is made on or before the due date of furnishing return of income u/s. 139(1) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited on or before the due date specified under the provisions of provident fund Act. The D.R. also relied upon the decision of Gujarat High Court, reported in (2014) 366 ITR 170, wherein the Hon'ble Gujarat High Court held that since assessee had not deposited said contribution to respective fund account on the date as prescribed in explanation to section 36(1)(va) of the Act, disallowance made by the A.O. was just and proper. Though, the D.R. relied upon certain judicial precedents which are in favour of the revenue, in view of the decision of Hon'ble Supreme Court, in the case of CIT Vs. M/s. Vegetables Products Ltd. reported in 88 ITR 192, wherein the Hon'ble Supreme Court held that if two reasonable constructions of a taxing provision are possible that construction which favours the assessee must be adopted, therefore, by respectfully following the decision of Supreme Court, when divergent views are expressed by different judicial forums, we prefer to follow the views expressed by the Courts which are in favour of the assessee. 10. Considering the facts and circumstances of this case and also following the judicial precedents as discussed above, we are of the v ..... X X X X Extracts X X X X X X X X Extracts X X X X
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