Case Law Details
Azamgarh Steel & Power Pvt. Ltd. Vs CPC (ITAT Delhi)
1. ITAT Delhi deletes addition made u/s 36(1)(va) read with section 2(24)(x) of the Income Tax Act, 1961 in respect of contributions received from employees on account of ESI / EPF deposited beyond time specified in respective law but before the due date u/s 139(1).
2. It is an undisputed fact that there has been delay in the actual deposit of payment to the appropriate authority but at the same time it was also a fact that all the contributions received by the assessee from its employees have been deposited before the due date of filing of return of income
3. No material has been placed before us to demonstrate that the decision rendered by the Co-ordinate Bench of Tribunal in the case of Dee Development Engineers Ltd. (supra) has been stayed/ set aside/ overruled by higher judicial forum.
4. Thus, relying upon the aforesaid decision of Dee Development Engineers Ltd. and for similar reasons hold that the CPC was not justified in disallowing the payment.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal filed by the assessee is directed against the order dated 09.09.2020 of the Commissioner of Income Tax (Appeals)-I, New Delhi pertaining to Assessment Year 2018-19.
2. The relevant facts as culled from the material on records are as under:
3. Assessee is a company stated to be engaged in providing labour on contract basis. Assessee electronically filed its return of income for A.Y. 20 18-19 on 30.09.20 18 declaring total income of Rs. 26,02,839/-. The return of income was processed by Centralized Processing Center (CPC) u/s 143(1) of the Act by order dated 16.10.2019 determining the total income at Rs.29,05,303/- by inter alia making addition of Rs.3,02,464/- on account of alleged late payment of Employees’ contribution towards EPF/ESI by invoking the provision of Section 36(1)(va) of the Act. Aggrieved by the order of CPC, assessee carried the matter before the CIT(A). Before the CIT(A), it was inter alia submitted that though there was delay in the deposit of contribution received from employees’ but the same were deposited in the respective funds before the date of filing of return of income and therefore, no disallowance was warranted. In support of the aforesaid contention, the assessee also relied on various decisions including the decision in the case of CIT vs. AIMIL Ltd. reported in 321 ITR 508 rendered by Hon’ble Delhi High Court. CIT(A) however, did not agree with the contentions of the assessee. He by relying on the decision of Hon’ble Gujarat High Court in the case of CIT vs. Gujarat State Road Transport Corporationreported in 366 ITR 170 and other decisions cited in the order, upheld the order of CPC. Aggrieved by the order of CIT(A), assessee is now before us and has raised the following grounds:
“1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts.
2. On the facts and circumstances of the case, learned CIT(A) has erred both on facts and in law in passing the order without providing reasonable opportunity of being heard to the assessee in clear violation of principle of natural justice.
3. (i) On the facts and circumstances of the case, learned CIT(A) has erred both on facts and in law in confirming the addition of Rs.3,02,464/- made by the AO(CPC) on account of late deposit of employees’ contribution towards provident fund and ESI Fund
(ii) That the above disallowance has been confirmed ignoring the contention of the assessee that employees’ contribution towards provident fund and ESI Fund would qualify for deduction even if paid after due date prescribed under Provident Fund Act and ESI Act but before due date of filing of return in view of section 43B of the Income Tax Act.
4. On the facts and circumstances of the case, learned CIT(A) has erred both on facts and in law in confirming the addition ignoring the various judicial pronouncements brought on record by the assessee in this regard.
5. That the appellant craves leave to add, amend or alter any of the grounds of appeal.”
4. Before us, at the outset, Learned AR submitted that though the assessee has raised several grounds but the sole controversy which is to be decided is with respect to addition of Rs.3,02,464/- on account of late deposit of employees’ contribution towards provident fund and ESI fund. Before us, Learned AR reiterated the submissions made before CIT(A). He further pointed to the chart of payments made by the assessee which is reproduced by the CIT(A) at page 9 & 10 of the order and pointed out that though there is delay in deposit of contribution received from the employees’ towards provident funds and ESI fund but the amounts have been deposited with the appropriate authorities before filing of return of income. He submitted that once the payment has been made before filing of return of income then no disallowance is called for and in support he also relied on the decision rendered by the Co-ordinate bench of Tribunal in the case of DCIT vs. Dee Development Engineers Ltd. order dated 08.04.2021 in ITA No.4959/Del/2016. He submitted that in the aforesaid decision, the Hon’ble Tribunal has decided the issue in favour of the assessee by relying on the decision of Hon’ble Delhi High Court in the case of CIT vs. AIMIL Ltd(supra). He further pointed out that Tribunal has also noted the fact that the decision rendered by the Hon’ble High Court in the case of CIT vs. M/s Bharat Hotels Ltd.reported in 410 ITR 417 which has been relied upon by the CIT(A), was without considering the decision of Hon’ble Delhi High Court in the case of CIT vs. AIMIL Ltd He therefore relying on the aforesaid decision of Delhi ITAT in the case of Dee Development Engineers Ltd. (supra) submitted that the addition made by the CPC and upheld by the CIT(A) be deleted.
5. Learned DR on the other hand supported the order of CIT(A).
6. We have heard the rival submissions and perused the materials available on record. The issue in the present ground is with respect to disallowance of delayed deposit of contribution received by the employees’ towards provident funds and ESI fund.
It is an undisputed fact that there has been delay in the actual deposit of payment to the appropriate authority but at the same time it was also a fact that all the contributions received by the assessee from its employees have been deposited before the due date of filing of return of income. We further find that identical issue arose in the case of Dee Development Engineers Ltd. (supra) wherein the Co-ordinate Bench of Tribunal after considering the decision in the case of CIT vs. AIMIL Ltd (supra) decided the issue of the assessee by observing as under:
“7. We have heard both the parties and perused all the relevant material available on record. As regards Ground No. 1, the assessee company has not deposited the employees’ contribution within the due date which is prescribed under the said statute i.e. Provident Fund and ESIC. This issue is dealt by the Hon’ble Delhi High Court in case of CIT vs. M/s Bharat Hotels Ltd. 410 ITR 417 wherein the issue is decided in favour of the Revenue, without considering the decision of the Hon’ble Delhi High Court in case of CIT vs. AIMIL Ltd (2010) 321 ITR 508 (Del.). But the Ld. AR relied upon the decision of the Hon’ble Delhi High Court in case of Pr. CIT vs. Pro Interactive Service (India) Pvt. Ltd. ITA No. 983/2018 pronounced on 10.09.2018 wherein the Hon’ble High Court decided the issue in favour of the assessee relying upon the judgment of AIMIL Ltd. (supra). The Hon’ble Delhi High Court held that the legislative intent was/is to ensure that the amount paid is allowed as expenditure only when payment is actually made. We do not think that the legislative intent and objective is to treat belated payment of Employee’s Provident Fund (EPD) and Employee’s State Insurance Scheme (ESI) as deemed income of the employer under Section 2(24)(x) of the Act. It is settled law that when two judgments are available giving different views then the judgment which is in favour of the assessee shall apply as held in case of Vegetable Products Ltd. 82 ITR 192 by the Hon’ble Supreme Court. Hence, in light of the latest decision in case of Pro Interactive Service (India) Pvt. Ltd., the issue is covered in favour of the assessee. Hence, Ground No. 1 is dismissed.”
7. Before us, Revenue has not pointed to any distinguishing feature in the facts of the case of Dee Development Engineers Ltd. (supra) and that of the assessee and further no material has been placed before us to demonstrate that the decision rendered by the Co-ordinate Bench of Tribunal in the case of Dee Development Engineers Ltd. (supra) has been stayed/ set aside/ overruled by higher judicial forum. We therefore, relying upon the aforesaid decision of Dee Development Engineers Ltd. and for similar reasons hold that the CPC was not justified in disallowing the payment. We therefore direct the deletion of addition. Thus ground of the appeal of the assessee is allowed.
8. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 31.05.2021
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