Rithwik Projects Pvt. Ltd. Vs ACIT (ITAT Hyderabad)
The ITAT Hyderabad considered the assessee’s appeal against the CIT(A)’s order dated 12 September 2025 for A.Y. 2021-22. The assessee, engaged in irrigation, construction, hydro-power projects, townships, railway tunnels and road works, had filed its return declaring total income of Rs.54,88,89,020/- under normal provisions and Rs.59,07,12,982/- under MAT provisions. Assessment under Section 143(3) was completed on 29 December 2022 determining total income at Rs.57,01,14,017/-, after additions relating to employees’ PF/ESI contribution, interest on late TDS payment, purchases, flood-damaged assets and denial of TDS credit on mobilization advance.
On the PF/ESI issue involving Rs.59,53,102/-, the assessee submitted that delays were caused by the Covid-19 lockdown and furnished month-wise payment details and challans. The Tribunal agreed that, under Section 36(1)(va) read with Section 2(24)(x), belated employees’ PF/ESI contributions are generally not allowable, following Checkmate Services Pvt. Ltd. However, it directed the AO to verify whether the particular delays were attributable to the lockdown and, if so, reconsider the disallowance in light of the evidence furnished. The issue was accordingly set aside to the AO.
Regarding Rs.31,21,770/- towards interest on late payment of TDS, the assessee argued that the payment was compensatory and deductible under Section 37(1). The Tribunal rejected the claim, holding that interest on delayed TDS remittance partakes the nature of tax and is penal in nature. Relying on Chennai Properties & Investment Ltd., it upheld the disallowance.
