TMI Blog2022 (4) TMI 551X X X X Extracts X X X X X X X X Extracts X X X X ..... UNTANT MEMBER This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals) [for short, CIT(A) ], National Faceless Appeal Centre (NFAC), Delhi in DIN Order No.ITBA/NFAC/S/250/2021-22/1037094422(1) dated 22.11.2021 for the Assessment Year (A.Y.) 2018-19. 2. Brief facts of the case are that the assessee, filed his return of income, declaring total income of ₹ 8,34,960/-. However, the Centralized Processing Centre (CPC) has made an addition of ₹ 4,20,420/- u/s 36(1)(va) of the Income Tax Act, 1961 (in short Act ) on account of delayed payment of employees contribution towards provident fund contribution of ₹ 3,22,269/- and ESI contribution of ₹ 98,158/-, thereby computed the total income at ₹ 12,55,380 /-. 3. Aggrieved by the intimation u/s 143(1) of the Act, the assessee filed an appeal before the CIT(A) which was migrated to the NFAC in terms of notification No.76/2020 in S.O.No. 3296(E), dated 25/09/2020 from CBDT. Before the Ld.CIT(A), the assessee reiterated that disallowance of employees share of contribution of PF and ESI made on account of late payment, even though the same were paid before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse of hearing of appeal the appellant humbly prays the Hon ble Income Tax Appellate Tribunal to delete the addition made of ₹ 4,20,427/- and to allow the appeal with consequent relief in favour of appellant or any other relief, the Hon ble Tribunal may feel it appropriate in the facts and circumstances of appellant s case. 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 05.05.202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 ITR 192, decided the issue in favour of the assessee. For the sake of clarity and convenience, we extract para No.5 to 10 which reads as under: 5. We have heard both the parties, perused the materials available on record and gone through 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 omi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and employer contribution. If the legislature intends to differentiate employees and employer contribution, then there would have been two due dates like in the case of Income Tax Act. Therefore, from the above, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vs. Merchem Ltd, reported in (2015) 378 ITR 443 and submitted that employees contribution to provident fund is allowed as deduction, if the same is deposited 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 assesse ..... 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