TMI Blog2022 (5) TMI 271X X X X Extracts X X X X X X X X Extracts X X X X ..... al Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2019-20. 2. The hearing of the appeal was concluded through video conference by both the parties in view of the prevailing situation of Covid-19 Pandemic. 3. The grounds of appeal raised by the assessee are as under:- 1. The impugned disallowance made in the order u/s 143(1) dated 4-06-2020 is bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same kindly be deleted. 2. Rs.39,81,357: The ld. CIT(A) erred in law as well as on the facts of the case in confirming the disallowance of expenditure made by AO, on account of employees contribution towards PF/ESI payment of Rs.39,81,357/- by invoking the provisions of Section 36(1)(va) of the Act. The disallowance so made being contrary to the provisions of law and facts of the case. Hence, the same kindly be deleted in full. 4. The Ground No. 1 of the assessee is general in nature which does not require any adjudication. 5.1 The main issue arises in this appeal of the assessee is regarding disallowance of employee s contribution of PF and ESI deposited belatedly but before due date of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inance Act 1983, that employees' contribution was never intended to be covered by Sec 43B of the Act. This has been reiterated and reinforced through Explanation 5 to Sec 43B and Expl 2 to Sec 36(1)(va) inserted by Finance Act 2021. If such was the intention of the Legislature expressly made clear in the Finance Act 2021, through the explanatory notes, it would necessarily to be held that Expl 5 to Sec 43B Expl 2 to Sec 36(1)(va) would apply to all pending matters as on date. On these arguments, it is held that the late payment of PF, ESI etc. are not covered by Sec 43B of the Act. 3.7 Admittedly in the present appeal, the facts indicate that the sum of Rs. 39,81,357/- being employees contribution to PF/ESI has been paid late under that Act. Based on the reasoning above, the addition made by the CPC deserves to be upheld. Therefore, the addition made of Rs. 39,81,357/- is confirmed and the grounds raised in this regard are dismissed. 4. In the result, the appeal is treated as dismissed. 5.5 During the course of hearing, the ld. AR of the assessee prayed that ld, CIT(A) has erred in confirming the addition of Rs.39,81,357/- on account of late payment of empl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd perused material on record. It is evident, the only reason for disallowance of payment made towards employees contribution to PF is, such payment was not made within the due date as provided under Expl. 2 to Sec 36(1)(va) of the Act. However, there is no dispute to the fact that such payments were made before the due date of filing of return of income for the impugned assessment year. That being the case, following the decision of Hon'ble Jurisdictional High Court in Hindustan Organic Ltd. vs CIT 366 ITR 001 we also allow assessee's claim of deduction. The addition made is deleted. Ground No. 3 is allowed 2.3 In CIT vs. Manglam Arts (2017) 398 ITR 594 (Raj HC) it was held that Mr. Mathur has also contended that regarding second issue with regard to ESI and PF, however, the same is covered by the decision of this Court in the case of CIT vs. State Bank of Bikaner Jaipur D.B. IT Appeal No. 177 of 2011 decided on 6th Jan., 2014, wherein it has been held as under Thus, we are of the view that where the PF and-or EPF, CPF, GPF etc., if paid after the due date under respective Act but before filing of the return of income under s. 139(1), cannot be disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 62 (Raj) as under : 6. We have considered the arguments advanced by the learned counsel for the Revenue and have also gone through the impugned orders. In our view, no substantial question of law arises out of the orders of the Tribunal as it is an admitted fact that the entire amount was deposited by the respondent-assessee at least on or before the due date of filing of the returns under s. 139 of the IT Act and being a concurrent finding of fact by the respective authorities and in the light of the judgments rendered by this Court in the case of CIT vs. State Bank of Bikaner Jaipur (IT Appeal No. 177 of 2011) so also CIT vs. Jaipur Vidyut Vitran Nigam Ltd. (IT Appeal No. 189 of 2011) of even date wherein it has been held that if the amount has been deposited on or before the due date of filing the return under s. 139 and admittedly it was deposited on or before the due date then the amount cannot be disallowed under s. 43B of the IT Act or under s. 36(1)(va) of the Act. In fact, in the above matters one of the parties is same as in the present appeals, therefore, the issue is no more res Integra in the light of judgments of this Court, referred to supra and, in our vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. 23. Thus, we are of the view that where the PF and-or EPF, CPF, GPF etc., if paid after the due date under respective Act but before filing of the return of income under s. 139(1), cannot be disallowed under s. 43B or under s. 36(1)(va) of the IT Act. Accordingly, in view of the binding precedent of the Hon'ble jurisdictional High Court, the disallowance made by the AO and confirmed by the learned CIT(A) is deleted. 2.9The Hon'ble Courts and Tribunals have followed the decision in the case of CIT v-s Alom Extrusions Ltd. (2009) 319 ITR 306 (SC)-227 CTR 417 (SC)- 32 DTR 49 (SC). 3.In the case of CIT v-s GhatgePali Transports Ltd. (2015) 112 DTR 369 (BOM) it is held that Tribunal was justified in holding that disallowance of the employees' contribution made on account of provident fund, ESI and pension fund on account of delay in payment of the employees' contribution was not sustainable. 4. Alternatively, it is settled law that if decisions of non-Jurisdictional High courts are in conflict with each other than decision favourable to assessee must be followed. Kindly refer CIT v. Vegetable Products Ltd. [1972] 88 ITR 192 (SC) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e memorandum of Finance Bill, 2021. At the outset, it is noted that the Coordinate Bench of this Tribunal in the case of M/s Kogta Financial (India) Ltd. Vs CPC (supra) has considered this issue in para 5 to 7 as under: 5. We have heard the rival contentions and perused the material available on record. In case of Mohangarh Engineers and Construction Company vs DCIT, CPC (Supra), speaking through one of us, we have extensively dealt with the identical matter relating to employee s contribution towards ESI/PF and our findings therein read as under:- 13. We have heard the rival contentions and perused the material available on record. On perusal of the details submitted by the assessee as part of its 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 16.04.2019 whereas due date of filing the return for the impugned assessment year 2019-20 was 31.10.2019 and the return of income was also filed on the said date. Admittedly and undisputedly, the employees s contribution to ESI and PF which have been collecte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect 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 pertinent to note that the respective Act such as PF etc. also provides that the amounts can be paid later on subject to payment of interest and other consequences an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instant case, admittedly and undisputedly, the employees contribution to ESI and PF collected by the assessee from its employees have been deposited well before the due date of filing of return of income u/s 139(1) of the Act. Further, the ld D/R has referred to the explanation to section 36(1)(va) and section 43B by the Finance Act, 2021 and has also referred to the rationale of the amendment as explained by the Memorandum in the Finance Bill, 2021, however, I find that there are express wordings in the said memorandum which says these amendments will take effect from 1st April, 2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years . In the instant case, the impugned assessment year is assessment year 2018-19 and therefore, the said amended provisions cannot be applied in the instant case. Similar view has been taken by the Coordinate Bangalore Benches in case of Shri Gopalkrishna Aswini Kumar vs. ACIT (supra) wherein it has held as under:- 7. The Hon'ble Karnataka High Court in the case of Essae Teraoka Pvt. Ltd., (supra) has taken the view that employee's contribution under section 36(1)(va) of the Act would also be covered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ches of the Tribunal in the case of Chatru Mal Garg Vs ACIT (supra) in para 7 as under: 7. I have heard the rival submissions and perused the materials on record. The issue in the present ground is with respect to disallowance under section 36(1)(va) of the Act. It is an undisputed fact that there has been slight delay in the deposit of employees contribution of PF and ESI by the assessee and the contribution have been deposited beyond the due date prescribed by the relevant authorities but at the same time it is also a fact that the amounts have been deposited with the appropriate authorities by the assessee before filing the return of income for the relevant assessment year. I find that Hon ble Delhi High Court in the case of CIT vs. AIMIL Ltd. (supra) has held that no disallowance under section 36(1)(va) of the Act is called for when the amounts are deposited before filing the return of income. Similar view has also been taken by the Hon ble Punjab Haryana High Court in the case of CIT vs. Hemla Embroidery Mills (P) Ltd (supra) and Indian Geotechnical Services (supra). As far as the applicability of amendment made by Finance Act 2021 is concerned, I find that the Co-or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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