Nakoda Ispat Ltd. Vs DCIT (ITAT Raipur)
Admittedly and undisputedly, the employees’s contribution to ESI and PF which have been collected by the assessee from its employees have thus been deposited well before the due date of filing of return of income u/s 139(1) of the Act. Till this provision is enacted 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 / ESIC etc. also provides that the amounts can be paid later on subject to payment of interest and other consequences and to get benefit under the Income Tax Act, an assessee ought to have actually deposited the entire amount as also to adduce evidence regarding such deposit on or before the return of income under sub-section (1) of Section 139 of the IT Act. 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 Section 139(1), cannot be disallowed under Section 43B or under Section 36(1)(va) of the IT Act. This view is rendered in CIT vs. Jaipur Vidyut Vitran Nigam Ltd., CIT vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd., and CIT vs Rajasthan State Beverages Corportation Limited. In all these decisions, it has been consistently held that where the PF and ESI dues are paid after the due date under the respective statues but before filing of the return of income under section 139(1), the same cannot be disallowed under section 43B read with section 36(1)(va) of the Act.
We further note that though the ld. CIT(A) has not disputed the facts of the case that the amount has been deposited by the assessee before the due date of filling return of income but has followed the decision of Hon’ble Gujarat HC in the case of CIT-II Vs. Gujarat State Road Transport where in the HC held that amendment in section 43B vide Finance Act 2003 will apply only for employer’s contribution. So far as employee’s contribution is concerned it is not governed by section 43B but by section 2(24)(x) and 36(1)(va).
Based on the above discussion and findings that the amendment is prospective and not retrospective and when there are two views on the issue one which is favourable to the assessee holds better footing. Therefore, based on the above findings we allow the claim of the assessee for Rs. 18,12,622/- being the employees contribution towards EPF/ESIC and direct the AO to deleted the said disallowance.
FULL TEXT OF THE ORDER OF ITAT RAIPUR
This appeal is filed by the assessee aggrieved from the order of the Commissioner of Income Tax (Appeal)- I, Raipur [ Here in after referred as Ld. CIT(A) ] for the assessment year 2012-13 dated 05.06.2018.
2. The hearing of the appeal was concluded through audio-visual medium on account of Government guidelines on account of prevalent situation of Covid-19 Pandemic, both the parties have placed their written as well as oral arguments during this online hearing process.
3. The assessee has taken following grounds in this appeal;
“1. On the facts and circumstances of the case, the CIT(A) has erred in sustaining the order the order of the AO. wherein the AO has erred in making disallowances of Rs. 18,12,622/- out of employment contribution towards EPF/ESIC. The disallowance made by the AO and Confirmed by the CIT-A is unjustified, unwarranted and Uncalled for.
2. The assessee reserves the right to add, amend or alter any grounds of appeal at any time of hearing.”
4. Briefly stated facts of the case are that the assessee is a company and is engaged in the business of manufacturing & selling of sponge iron, ingots, billets and generation of power. The assessee company filed return electronically on 28.09.2012 declaring total income at Rs. Nil. The assessment proceedings was completed u/s. 143(3) of the Act by order dated 31.03.2015 after making following disallowance
Disallowance u/s. 14A r.w.r 8D Rs. 10,24,043
Employee Contribution towards EPF/ESIC Rs. 18,12,622
5. Aggrieved, from the said assessment the assessee company moved an appeal before the first appellate authority wherein the disallowance u/s. 14A is allowed and assessee did not succeed for the second addition and thus, against the said order of CIT(A), the assessee is in appeal before us.
6. During the course of hearing, the ld. AR submitted that the assessee-company deposited employee’s contribution of PF/ESI though with a delay of few days from the due dates mentioned in the respective Acts, however the same was deposited well before the due date of filing of return of income. It was submitted that the said fact is not under dispute and where such contribution has been deposited before the due date of filing of the return of income, no disallowance U/s 36(1)(va) of the Act can be made and in support, reliance was placed on the following decisions:
