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2022 (10) TMI 388 - AT - Income TaxAdditions in relation to belated remittance to PF and ESI - Delayed payments made but prior to the due date of filing of the return of income u/s 139(1) - HELD THAT:- On identical facts, the Bangalore Bench of the Tribunal in the case of M/s. Shakuntala Agarbathi Company [2021 (10) TMI 1196 - ITAT BANGALORE] by following the dictum laid down by the Hon’ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd [2014 (3) TMI 386 - KARNATAKA HIGH COURT] had held that the assessee would be entitled to deduction of employees’ contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s 139(1). Therefore, the amended provisions of section 43B as well as 36(1)(va) of the I.T.Act are not applicable for the assessment year under consideration. By following the binding decision of the Hon’ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT (supra), the employees’ contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the I.T.Act is an allowable deduction. Accordingly, we decide this issue in favour of the assessee and the disallowance made by the Assessing Officer is deleted. Disallowance u/s 40(a)(ia) - assessee has not deducted tax at source on some payments made by it - assessee submitted before the CIT(A) that income has already been offered to tax by the payee and certificate has been collected by the assessee in this regard - HELD THAT:- It is clear that when the payee has paid the taxes, the benefit of proviso to section 201 of the I.T.Act is extended even for claiming deduction of expenses wherein the assessee had failed to deduct tax at source. The assessee in the instant case had provided certificates to the effect (Form 26A) that the amount paid to the payee have been offered to tax. CIT(A) has rejected the claim of the assessee, since it had not complied with Rule 31ACB of the I.T.Rules, 1962. The compliance of Rule is directory and same can be done at later point of time. Therefore, in the interest of justice and equity, we are of the view the matter needs to be examined by the A.O. de hors the observations of the CIT(A). If the assessee can prove that the payee has included the receipt from the assessee as part of his income and filed return disclosing the same, then the benefit of proviso to section 201 of the I.T.Act will be extended to also section 40(a)(ia) of the I.T.Act. For the above said purpose, the issue is restored to the files of the A.O. The assessee shall cooperate with the A.O. and shall furnish the necessary details proving its case.
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