Article contains recent 29 Judgment on the issue of Disallowance towards employees’ contribution towards ESI and PF for failure to pay the same within the prescribed due date under the relevant Statute.
| Sl no | Case Reference | Issue | Decision – Summarised |
| 1 | disallowance made u/s 143 (1) on assessee’ s failure to pay the employees’ contribution of ESI & PF within the prescribed due date under the relevant Statute as per section 36(1) – scope of amendment | HELD THAT:- It is not in dispute that employees’ contribution to ESI and PF collected by the assessee from its employees had been deposited well before the due date of filing of return of income u/s 139 (1) of the Act. We find that the issue is squarely covered by the decisions of the Hon’ble Rajasthan High Court, Hon’ble Himachal Pradesh High Court as well as Hon’ble Punjab & Haryana High Court. We further note that though the Id. CIT(A) has not disputed the various decisions of Hon’ble High Courts including the decision of the jurisdictional Himachal Pradesh High Court but has referred to the amendment brought in by the Finance Act, 2021.
It is a consistent position across various Benches of the Tribunal including Chandigarh Benches that the amendment which has been brought in by the Finance Act, 2021 shall apply w. e. f. assessment year 2021 – 22 and subsequent assessment years and the impugned assessment year being assessment year 2018- 19, the said amendment cannot be applied in the instant case. Therefore the addition made by way of adjustment while processing the return of income u/s 143 (1) of the Act, amounting to ₹ 11,99,710/- so made by the CPC towards the deposit of employees’ contribution towards ESI and PF paid before the due date of filing of the return of income u/s 139 (1) of the Act, is hereby directed to be deleted. – Decided in favour of assessee. |
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| 2 | Contribution deposited beyond the due date prescribed under relevant Act and deposited within due date by filing the return on u/s 139(1) | HELD THAT:- We find no merit in the argument of the ld.DR since the explanation as provided in Finance Act 2021 prescribes that the amendment in both sec.36(va) as well as 43B by inserting corresponding explanation that although impugned PF comes in the form of provision and the same is applicable from 1/4/2021 onwards only.
In the present case we are concerned with the asst. year 2017-18 and the amended provision could not be applied retrospectively as it is only applicable w.e.f 1/4/2021. Being so no disallowance could be made by the AO in respect of PF/ESI paid within the due date of filing return of income. Though, it was beyond the date mentioned in the respective Act. This view of ours is supported by various judgment relied on by the ld.AR. Accordingly the appeal of the assessee is allowed. |
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| 3 | Mavinahalli Shivananjappa Vijay Kumar Vs DCIT, CPC (ITAT Bangalore), Appeal Number : ITA Nos. 596 & 597/Bang/2021, Date of Judgement/Order : 13/12/2021 | Disallowance of Employees contribution of PF & ESI u/s 36(1)(va) remitting the dues beyond the due date prescribed under the respective Statutes | HELD THAT:- We notice that an identical issue has been examined by the co-ordinate bench in the case of Shri Gopalakrishna Aswini Kumar [2021 ITAT BANGALORE] wherein the co-ordinate bench has expressed the view that the amendment made to sec.36(1)(va) of the Act will have prospective application and hence the decision rendered in the case of M/s Essae Teraoka (P.) Ltd [2014 KARNATAKA HIGH COURT].
Thus we hold that the additions made in both the years are liable to be deleted. Accordingly, we set aside the orders passed by Ld CIT(A) in both the years under consideration and direct the AO to delete the impugned additions in both the years – Decided in favour of assessee. |
| 4 | Employees’ share of contribution to ESI to the extent not paid on or before the due date as mentioned in Sec 36(1)(va) – It was the case of the assessee that employees’ share of ESI has been paid before the due date for filing of return u/s. 139(1) –
Whether the amendment to the provisions to section 43B and 36(1)(va) of the Act by the Finance Act, 2021, has to be construed as retrospective and applicable for the period prior to 01.04.2021 also? |
HELD THAT:- The Hon’ble Karnataka High Court in the case of Essae Teraoka Pvt. Ltd [2014 – KARNATAKA HIGH COURT] has taken the view that employee’s contribution under section 36(1)(va) of the Act would also be covered under section 43B of the Act and therefore if the share of the employee’s share of contribution is made on or before due date for furnishing the return of income under section 139(1) of the Act, then the assessee would be entitled to claim deduction. Therefore, the issue is covered by the decision of the Hon’ble Karnataka High Court. In this case there is no dispute that the assessee made payment of the Employees share of PF/ESI on or before the due date for filing return of income for AY 2017-18 u/s. 139(1) of the Act.
On this aspect, we find that the explanatory memorandum to the Finance Act, 2021 proposing amendment in section 36(1)(va) as well as section 43B is applicable only from 01.04.2021. These provisions impose a liability on an assessee and therefore cannot be construed as applicable with retrospective effect unless the legislature specifically says so. In the decisions referred to by us in the earlier paragraph of this order on identical issue the tribunal has taken a view that the aforesaid amendment is applicable only prospectively i.e., from 1.4.2021. We are therefore of the view that the impugned additions made under section 36(1)(va) of the Act, deserves to be deleted. Appeal of assessee allowed. |
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Disallowance of deduction claimed on account of Employees’ contribution to PF & ESI by invoking the amended provisions of Section 36(1)(va) r.w.s. 43B – Whether the payment to employees contribution to PF & ESI is well within the due date of filing of return of income by the assessee u/s.139(1) ?
Scope of amendment – Whether by the Finance Act, 2021, the provisions of Section 36(1)(va) by inserting the Explanation 2 r.w.s. 43B of the Act have been amended, whereby it is clarified that the provisions of Section 43B of the Act shall not apply and shall be deemed ought to have been applied for the purpose of determining the due date under this clause? |
HELD THAT:- There are series of decisions of various High Courts on this issue and even Hon’ble Jurisdictional High Court in the case of M/s. Industrial Security & Intelligence India P Ltd. [2015 – MADRAS HIGH COURT] held that the payment of employees contribution in regard to PF & ESI if made before the due date of filing of return of income u/s.139(1) of the Act, the same is allowable as deduction as per the provisions of Section 2(24)(x) r.w.s. 36(1)(va) r.w.s. 43B.
As before insertion of Explanation 2 to Section 36(1)(va) of the Act, there is ambiguity regarding due date of payment of employees’ contribution on account of provident fund and ESI, whether the due date is as per the respective acts or up to the due date of filing of return of income of the assessee. As noted by Hon’ble Supreme Court an amendment made to a taxing statute can be said to be intended to remove hardship only of the assessee and not of the Department. Imposing of a retrospective levy on the assessee would be caused undue hardship and for that reason Parliament specifically chose to make the proviso affective from a particular date. In the present case also, the amendment brought out by Finance Act, 2021 w.e.f. 01.04.2021 i.e. for and from assessment year 2021-22 of Explanation-2 to s. 36(1)(va) of the Act and not retrospectively. Thus, from the above, it is clear that the amendment brought in the statute i.e., by Finance Act, 2021, the provisions of Section 36(1)(va) r.w.s. 43B of the Act amended by inserting Explanation 2 is prospective and not retrospective. Hence, the amended provisions of Section 43B r.w.s. 36(1)(va) of the Act are not applicable for the assessment year 2018-19 but will apply from assessment year 2021-22 and subsequent assessment years. Hence, this issue of assessee’s appeal is allowed. |
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Disallowance u/s 36(1)(va) – late remittance of employees’ contribution to PF and ESI under the respective Acts –
scope of amended provisions of section 43B as well as 36(1)(va) – As contended that assessee has paid the employees’ contribution prior to the due date of filing of return under section 139(1) |
HELD THAT:- On identical facts, the Bangalore Bench of the Tribunal in the case of M/s. Shakuntala Agarbathi Company [2021 – ITAT BANGALORE] by following the dictum laid down in the case of Essae Teraoka Pvt. Ltd [2014 – KARNATAKA HIGH COURT] had held that the assessee would be entitled to deduction of employees’ contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s 139(1) of the I.T.Act. It was further held by the ITAT that amendment by Finance Act, 2021, to section 36[1][va] and 43B of the Act is not clarificatory.
The amended provisions of section 43B as well as 36(1)(va) of the I.T.Act are not applicable for the assessment years under consideration. By following the binding decision of the Hon’ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT (supra), the employees’ contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the I.T.Act is an allowable deduction. Accordingly, we decide this issue in favour of the assessee |
| 7 | Anand Sweets and Savouries Vs DCIT (ITAT Bangalore), Appeal Number : ITA No.530/Bang/2021, Date of Judgement/Order : 06/12/2021 | Delayed Employees’ contribution to PF and ESI – Deposit beyond the due date prescribed under relevant Act and deposited within due date by filing the return on u/s 139(1) | HELD THAT:- We find no merit in the argument of the ld.DR since the explanation as provided in Finance Act 2021 prescribes that the amendment in both sec.36(va) as well as 43B by inserting corresponding explanation that although impugned PF comes in the form of provision and the same is applicable from 1/4/2021 onwards only. In the present case we are concerned with the asst. year 2017-18 and the amended provision could not be applied retrospectively as it is only applicable w.e.f 1/4/2021. Being so no disallowance could be made by the AO in respect of PF/ESI paid within the due date of filing return of income. Though, it was beyond the date mentioned in the respective Act. This view of ours is supported by various judgment relied on by the ld.AR. Accordingly the appeal of the assessee is allowed. |
| 8 | Pachouli Wellness Clinic LLP Vs ITO (ITAT Delhi), Appeal Number : ITA No: 999/Del/2021, Date of Judgement/Order : 25/11/2021 | Delayed employees’ contribution towards Provident Fund – addition u/s 2(24)(x) and section 36(1)(va) | HELD THAT:- As decided in PLANMAN HR (P) LTD., 48, COMMUNITY CENTRE, NARAINA INDUSTRIAL AREA, PHASE-I, NEW DELHI. [2021 – ITAT DELHI] Delayed payments of employee’s contribution to Provident Fund/ESIC is allowable if it is deposited before the return is filed u/s 139(1). In view of the legal position on the issue and the order of the Hon’ble ITAT, Delhi in the appellant’s own case [2017 – ITAT DELHI] the company is eligible for deduction made by the AO by invoking provisions of Section 36(1)(va) read with 2(24)(x) and 43B of the Act. The AO is, therefore, directed to delete the addition. – Decided in favour of assessee. |
| 9 | Star Facilities Management Limited VS ITO (ITAT Delhi), Appeal Number : ITA No. 1755/Del/2020, Date of Judgement/Order : 01/11/2021
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Delayed payment of employees’ contribution to PF and ESI – allowability of employees’ contribution to PF and ESI if deposited after the due date prescribed under the relevant Act, but, before the due date of filing of return of income u/s. 139(1) – Assessee submitted that the addition is not justified since the assessee has deposited the employees’ contribution to PF and ESI before the due date of filing the return of income | HELD THAT:- Admittedly, the assessee, in the instant case, has deposited the employees’ contribution to PF and ESI after the relevant date prescribed under the PF and ESI Act, but, before the due date of filing the return of income.
In the case of PCIT vs. Pro Interactive Service (India) Pvt. Ltd. [2018 – DELHI HIGH COURT] has held that ‘the legislative intent was/is to ensure that the amount paid is allowed as an expenditure only when payment is actually made. The Hon’ble High Court has further held that legislative intent and objective is not to treat belated payment of Employee’s Provident Fund (EPD) and Employee’s State Insurance Scheme (ESI) as deemed income of the employer under the Act. Tribunal in the case of CIT v. Dee Development Engineers Ltd.[2021 – ITAT DELHI] has decided the issue in favour of the assessee holding that no disallowance u/s. 36(1)(v) r.w.s. Section 2(24)(x) can be made if the employees’ contribution to PF and ESI are deposited after the due date prescribed under the relevant Acts, but, paid before the due date of filing of return. Since the assessee, in the instant case has, admittedly, deposited the employees’ contribution to PF and ESI before the due date of filing of the return of income, therefore we hold that no disallowance u/s. 36(1)(v) r.w.s. Section 2(24)(x) can be made in the instant case – Decided in favour of assessee. |
| 10 | Transzone Logistrics (India) Pvt. Ltd. Vs DCIT (ITAT Delhi), Appeal Number : ITA Nos.1739 & 1740/Del/2020, Date of Judgement/Order : 29/10/2021
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Delayed deposit of ESI/PF u/s 36(1)(va) – | HELD THAT:- It is an undisputed fact that though there has been delay in deposit of PF/ESI dues but it is also an undisputed fact that money collected from employees, have been deposited with the appropriate authorities before filing of return of income. We find that Delhi Bench of Tribunal in the case of Dee Development Engineers Ltd. [2021 – ITAT DELHI] after considering the decision of Bharat Hotels [2018 DELHI HIGH COURT] has decided the issue in favour of the assessee – no disallowance u/s 36(1)(va) of the Act is called for in the present case. Decided in favour of assessee. |
| 11 | Jai Enterprises Vs DCIT (ITAT Jaipur), Appeal Number : ITA. No. 248/JP/2021, Date of Judgement/Order : 25/11/2021 | Delayed Employee’s contribution towards ESI and EPF – assessee’s failure to pay the employee’s contribution of PF/ESI within the prescribed due dates as per Section 36(1)(va) | HELD THAT:- In the 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, we 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.
Addition by way of adjustment while processing the return of income u/s 143(1) so made by the CPC towards the deposit of the employees’s contribution towards ESI and PF though paid before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted. – Decided in favour of assessee. |
| 12 | Navrathan Jewellers Pvt. Ltd. Vs ADIT (ITAT Bangalore), Appeal Number : ITA No. 470Bang/2021, Date of Judgement/Order : 23/11/2021
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Delayed employee’s contribution – Disallowance u/s 36(1)(va) r.w.s 43B – whether the amendment to the provisions to section 43B and 36(1)(va) of the Act by the Finance Act, 2021, has to be construed as retrospective and applicable for the period prior to 01.04.2021 also? | HELD THAT:- As in the case of Essae Teraoka Pvt. Ltd. [2014 – KARNATAKA HIGH COURT] has taken the view that employee’s contribution u/s 36(1)(va) of the Act would also be covered under section 43B of the Act and therefore if the share of the employee’s share of contribution is made on or before due date for furnishing the return of income under section 139(1) of the Act, then the assessee would be entitled to claim deduction. Therefore, the issue is decided in favour of the Assessee.
Scope of amendment – The explanatory memorandum to the Finance Act, 2021 proposing amendment in section 36(1)(va) as well as section 43B is applicable only from 01.04.2021. These provisions impose a liability on an assessee and therefore cannot be construed as applicable with retrospective effect unless the legislature specifically says so – the aforesaid amendment is applicable only prospectively i.e., from 1.4.2021. We are therefore of the view that the impugned additions made under section 36(1)(va) of the Act deserves to be deleted. – Decided in favour of assessee. |
| 13 | Abhimanyu Sharma Vs ITO (ITAT Jaipur), Appeal Number : ITA No. 175/JP/2021, Date of Judgement/Order : 23/11/2021 | Additions in respect of employees contribution towards ESI/PF – Addition not made within the prescribed due date U/s 36(1)(va) of the Act and since these amount were not disallowed in the return of income filed by the assessee, the variance between the tax audit report and ITR has been duly flagged by the CPC in the computerized processing and disallowance u/s 143(1)(a)(iv) on the basis of fact furnished by the assessee was made which clearly fails within ambit of prima facie adjustment to be carried out u/s 143(1)(a)(iv) | HELD THAT:-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) .
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. The addition by way of adjustment while processing the return of income u/s 143(1) so made by the CPC towards the deposit of the employees’s contribution towards ESI and PF paid before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted. – Decided in favour of assessee. |
| 14 | Nikhil Mohine Vs DCIT (ITAT Jabalpur), Appeal Number : ITA No. 37 & 38/Jab/2021, Date of Judgement/Order : 18/11/2021 | Delayed Employees’ contribution to the employees’ provident fund and the employees’ state insurance fund – Delay deposit (by the assessee-employer) as beyond the due dates – returned income having been made by the AO u/ss. 143(1) and 154 – | HELD THAT:- Sec. 43B(b) does not include the employee contribution, and even regarding so is to no avail, rendering the Explanations under reference, even as suggested by their express language, explanatory. An examination of the Notes on Clauses to, and the Memorandum explaining the Provisions of, Finance Bill, 2021, however, resolves the matter beyond the pale of any doubt. While confirming the Explanations under reference to be explanatory of the law, even as signified by the clear, unambiguous language employed therein, are yet stated to be prospective inasmuch as they are applicable assessment year 2021-22 onwards.
Lastly, no decision by Hon’ble jurisdictional High Court in the matter has been either cited before me, or found, which, where so, would, irrespective of the view expressed therein, hold for the relevant years, being prior to the year of applicability of the Explanations under reference. No adjustment, in view of the conflicting judicial opinion could, accordingly, be made to the returned income u/s. 143(1)/154, which sections admit only issues on which there could be conceivably no two views, rampant, irrespective of merits thereof, in the instant case, which aspect, as explained therein, has been given cognizance to in making the provision applicable not retrospectively. The assessee, accordingly, succeeds in his challenge to the impugned adjustments, which are held as bad in law and directed for deletion. This is of course subject to any different view taken by the Hon’ble jurisdictional High Court for any year prior to AY 2021-22. Assessee appeal allowed. |
| 15 | Lumino Industries Ltd. Vs ACIT (ITAT Kolkata), Appeal Number : I.T.A. Nos. 231 & 365/Kol/2021, Date of Judgement/Order : 17/11/2021 | Contribution of employees’ share towards ESI, PF, Superannuation Fund or any other fund set up for the welfare of the employee u/s 36(1)(va) read with Section 2(24)(x) when the payments were made within the due dates of filing of return u/s 139 – whether the amendment brought in by Finance Act, 2021, is retrospective or prospective in operation? | HELD THAT:- when we adjudicate whether the view of Ld CIT(A) that the explanation 2 brought in by Finance Act, 2021 is retrospective, let us look at the “Notes on Clauses and the relevant clauses 8 & 9 of the Finance Bill, 2021 (supra) pertaining to the issue in hand which in clear and unambiguous terms spells out the intention of Parliament that the amendment shall take effect from 1st April, 2021 and therefore will accordingly apply to Assessment Year 2021-22 and subsequent years. So since the legislative intent is clear, the amendment brought in by Finance Act, 2021 on this issue as discussed is prospective and Ld. CIT(A) erred in holding otherwise. So till AY 2021-22, the Jurisdictional High Court’s view in favor of assessee will hold good and is binding on us.
As relying on the ratio of the Hon’ble Supreme Court in the case of Vatika Township Pvt. Ltd. [2014] and M/s Snowtex Investment Ltd. [2019 SUPREME COURT] and also taking note of the binding decision of the Hon’ble Jurisdictional Calcutta High Court on this issue before us in Shri Vijayshree Ltd. Ltd.[2011 ) , M/s Coal India Ltd [2015 CALCUTTA HIGH COURT], M/s Akzo Nobel India Ltd. [2016 CALCUTTA HIGH COURT], we set aside the impugned order of Ld CIT(A) and direct the AO to allow the claim of deduction in respect of employees contribution shares towards ESI, PF, by the assessee before the due date of filing of return u/s 139(1) of the Act. Therefore the appeal of assessee succeeds and so, it is allowed in favor of assessee. |
| 16 | DCIT Vs Kesoram Industries Ltd. (ITAT Kolkata), Appeal Number : I.T.A. No. 1777/Kol/2019, Date of Judgement/Order : 28/10/2021 | Delay in deposit of employees contribution to PF and ESI u/s 36(1)(va) read with Section 2(24)(x) – assessee contributing/depositing the same before the due date of filing of return of income u/s 139(1) – CIT-A allowed deduction | HELD THAT:- As relying on M/S. VIJAY SHREE LIMITED [2011 – CALCUTTA HIGH COURT] and HARENDRA NATH BISWAS VERSUS DCIT, CIRCLE-29 KOLKATA [ – ITAT KOLKATA] CIT(A) has rightly allowed the deduction in respect of employee’s contribution to PF & ESI which had been admittedly remitted on or before the due date for filing the return of income u/s. 139(1) of the Act. We therefore do not find any infirmity in the order of the Ld. CIT(A) and, we confirm the same and dismiss this ground of appeal of revenue |
| 17 | Suba Singh Vs ITO (ITAT Amritsar), Appeal Number : ITA No. 85/ASR/2021, Date of Judgement/Order : 10/11/2021 | Addition made on account of employees’ contribution to PF & ESI – delay in deposits | HELD THAT:- Employees’ contributions qua ESI & PF involved in the present appeal is squarely covered by the decision of coordinate bench of the Tribunal delivered in the case of Vinko Auto Industries Limited, . [2021 – ITAT AMRITSAR] wherein the Tribunal has deleted the disallowances made by the AO on account of delay in depositing the employees’ contribution towards ESI & PF as the same were deposited later than the prescribed time in the relevant acts but prior to the filling of the Return u/s.139(1) – respectfully following the aforesaid order of the Coordinate Bench of the Tribunal, the disallowance qua employees’ contribution towards PF and ESI, sustained by the Ld. CIT(A) stands deleted. Thus, grounds No.1 to 3 are allowed. |
| 18 | Citi Centre Developers Vs CPC (ITAT Chandigarh), Appeal Number : ITA Nos. 126/Chd/2021, Date of Judgement/Order : 28/10/2021 | Disallowance on account of late payments towards EPF and ESI u/s 36(1)(va) – scope of amendment | HELD THAT:- Since the facts of the present cases are identical to the facts involved in RAJA RAM [2021 – ITAT CHANDIGARH] therefore respectfully following the earlier orders as referred to herein above of the different Benches of the ITAT, the impugned additions made by the Assessing Officer and sustained by the Ld. CIT(A) on account of deposits of employees contribution of ESI & PF prior to filing of the return of income u/s 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. – Decided in favour of assessee. |
| 19 | Pee Tee Turners Vs Assistant Director of CPC (ITAT Jaipur), Appeal Number : ITA. No. 105/JP/2021, Date of Judgement/Order : 28/10/2021 | Addition u/s 2(24)(x) read with section 36(1)(va) – delay in payment of ESI and PF made by CPC – whether CPC as no power to make adjustment u/s 143(1) of the Income Tax Act for disallowance of ESI/PF late deposit u/s 36(1)(va)/43B ? | HELD THAT- In the 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) – 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 – 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 2019-20 and therefore, the said amended provisions cannot be applied in the instant case.
The addition by way of adjustment while processing the return of income u/s 143(1) so made by the CPC towards the deposit of the employees’s contribution towards ESI and PF though paid before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted. – Decided in favour of assessee. |
| 20 | Amandeep Singh Khurana Vs ITO (ITAT Delhi), Appeal Number : ITA No. 1822/Del/2020, Date of Judgement/Order : 27/10/2021 | Addition u/s 36(1)(va) – delayed deposit of employees contribution of EPF and ESI but paid before the due date of filing of return – | HELD THAT:- It is an undisputed fact that though there has been delay in deposit of PF/ESI dues but it is also an undisputed fact that money collected from employees, have been deposited with the appropriate authorities before filing of return of income.
Following the decision rendered in the case of Dee Development Engineers Ltd. [2021 – ITAT DELHI] and for similar reasons hold that no disallowance u/s 36(1)(va) of the Act is called for in the present case. I therefore direct the deletion of addition. Thus the ground of assessee is allowed |
| 21 | Aroon Facilitation Management Services Pvt. Vs DCIT (ITAT Delhi), Appeal Number : ITA No. 1824/Del./2020, Date of Judgement/Order : 13/10/2021 | Delayed payment of employees’ contribution to PF & ESI – Addition on the ground that this was not paid within prescribed due date and deposited late in the light of provision of Section 2(24)(x) read with section 36(1)(va) relying upon the information given by the Auditor in Form 3CD – | HELD THAT:- Since in the instant case the assessee admittedly has deposited the employees’ contribution to PF & ESI before the due date of filing of the income tax return, therefore as relying on INSTA EXHIBITIONS PVT. LTD, C/O. CHACHAN & LATH [2021 ITAT DELHI] AND PRO INTERACTIVE SERVICE (INDIA) PVT. LTD. [2018 – DELHI HIGH COURT] CIT(A) is not justified in sustaining the adjustment made by the A.O-CPC on account of belated payment of employees’ contribution to PF & ESI. – Decided in favour of assessee. |
| 22 | Worldwide Facility Management Services Pvt. Ltd. Vs DCIT (ITAT Delhi), Appeal Number : ITA. No. 1823/Del./2020, Date of Judgement/Order : 13/10/2021 | Delayed payment of employees’ contribution to PF & ESI – Addition under section 36(1)(va) – Contribution were paid late in terms of the provisions of ESIC and EPF, but before the filing of return of income for the present period – | HELD THAT:- Since in the instant case the assessee admittedly has deposited the employees’ contribution to PF & ESI before the due date of filing of the income tax return, therefore, respectfully following the decisions INSTA EXHIBITIONS PVT. LTD, C/O. CHACHAN & LATH [2021 – ITAT DELHI] and PRO INTERACTIVE SERVICE (INDIA) PVT. LTD. [2018 – DELHI HIGH COURT] hold that the Ld. CIT(A) is not justified in sustaining the adjustment made by the A.O-CPC on account of belated payment of employees’ contribution to PF & ESI. Therefore, set aside the order of the Ld. CIT(A) and direct the A.O. to delete the disallowance. The grounds raised by the assessee are accordingly allowed. |
| 23 | Rukmini Polytubes Pvt. Ltd. Vs DCIT (ITAT Delhi), Appeal Number : ITA. No. 1855/Del./2020, Date of Judgement/Order : 13/10/2021 | Addition u/s 43B – Delayed payment of employees’ contribution to PF & ESI – CIT(A) deleted the addition subject to verification of payment at the end of the A.O | HELD THAT:- Adjustment u/s 43B(b) was made by the CPC on account of belated payment of PF and ESI payment of Bonus and GST – as submission of the Assessee that the above payments were made before the due dates as prescribed under the respective Act and due to a clerical mistake in the reporting by the Auditor’s the same was disallowed.
Since the Ld. CIT(A) has sustained the addition merely based on the report of the Auditor, therefore, considering case in the interest of justice, restore this issue to the file of the A.O. with a direction to verify the details and if the payments are made before the specified date, then, to delete the addition. Ground of appeal No.1 of the assessee is accordingly allowed for statistical purposes. |
| 24 | Adama Solution P. Ltd. Vs ADIT (ITAT Delhi), Appeal Number : ITA.No. 1800/Del./2020, Date of Judgement/Order : 13/10/2021 | Delayed payment of employees’ contribution to PF & ESI – As submitted assessee has deposited the employees’ contribution to PF & ESI before the due date of filing of the income tax return | HELD THAT:- Since in the instant case the assessee admittedly has deposited the employees’ contribution to PF & ESI before the due date of filing of the income tax return, therefore hold that the Ld. CIT(A) is not justified in sustaining the adjustment made by the A.O-CPC on account of belated payment of employees’ contribution to PF and ESI. See M/S. BHARAT HOTELS LTD. [2018 – DELHI HIGH COURT] – Decided in favour of assessee. |
| 25 | Vansh Jain Vs DCIT (ITAT Delhi), Appeal Number : ITA No. 1853/Del./2020, Date of Judgement/Order : 13/10/2021 | Delayed payment of employees’ contribution to PF & ESI – Assessee filed rectification application u/s 154 stating that contribution has already been paid into the relevant fund account well before the due date specified for furnishing of return of income under sub-section (1) of section 139 | HELD THAT:- As in the instant case the assessee admittedly has deposited the employees’ contribution to PF & ESI before the due date of filing of the income tax return, therefore, respectfully following the decision M/S. BHARAT HOTELS LTD. [2018 (9) DELHI HIGH COURT], thus hold that the Ld. CIT(A) is not justified in sustaining the adjustment made by the A.O-CPC on account of belated payment of employees’ contribution to PF & ESI – We set aside the order of the Ld. CIT(A) and direct the A.O. to delete the disallowance. – Decided in favour of assessee. |
| 26 | Express Roadway P. Ltd. Vs ACIT (ITAT Delhi), Appeal Number : ITA No.5570/Del/2017, Date of Judgement/Order : 11/10/2021 | Disallowance u/s 36(1)(va) – delayed payment of ESI/EPF – deduction on account of employees contribution to PF on the ground that it is not paid within the due date – As argued most of the payments were made within the extended period of 5 days – whether CIT(A) has erred on facts and in law in not allowing the deduction on account of employees contribution to PF on the ground that it is not paid within the due date as provided u/s 36(1)(va) of the IT Act, even though it was paid before due date of the filing of return of income? – | HELD THAT:- CIT(A) while deciding the issue in favour of the assessee has given a finding that though there was delay in deposit of ESI & EPF contribution but the same were deposited with the appropriate authorities before the due date of filing of return of income. We find that Hon’ble Delhi High Court in the case of CIT vs. AIMIL Limited [2009 ] held that if the employees‟ contribution is not deposited by the due date prescribed under the relevant Acts and is deposited late, the employer not only pays interest on delayed payment but can incur penalties also, for which specific provisions are made in the Provident Fund Act as well as the ESI Act. Therefore, the Act permits the employer to make the deposit with some delays, subject to the aforesaid consequences. Insofar as the Income Tax Act is concerned, the assessee can get the benefit if the actual payment is made before the return is filed – Decided in favour of assessee |
| 27 | Ridhi Sidhi Mills (India) Pvt. Ltd. Vs DCIT (ITAT Jodhpur), Appeal Number : ITA Nos. 71 & 72/Jodh/2021, Date of Judgement/Order : 28/09/2021 | Late deposit of employees share of PF & ESI which were deposited after the due date but before the due date of filing of return of income – AO made the additions of the impugned amounts for the reasons that the assessees did not deposit the amounts of employees contribution as per the provisions of section 36(1)(va) | HELD THAT:- It is not in dispute that the assessees deposited the contribution of PF & ESI belated in terms of section 36(1)(va) of the Act, however, the said deposits were made prior to filing of return of income u/s 139(1) –
As relying on HARENDRA NATH BISWAS VERSUS DCIT, CIRCLE-29 KOLKATA [2021 ITAT KOLKATA] and MOHANGARH ENGINEERS AND CONSTRUCTION COMPANY [2021 – ITAT JODHPUR] the impugned additions made by the Assessing Officer and sustained by the Ld. CIT(A) on account of deposits of employees contribution of ESI & PF prior to filing of the return of income u/s 139(1) of the Act, in both the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. – Decided in favour of assessee. |
| 28 | Chodavaram Vs Asst. Director of Income Tax (ITAT Visakhapatnam), Appeal Number : I.T.A. Nos. 25 & 28/VIZ/2021, Date of Judgement/Order : 23/09/2021 | Delayed payment qua employees share of ESI and PF – deposit of employees contribution qua ESI & PF after the prescribed dates as per the relevant Acts i.e. ESI & PF, but before filing of return u/sec. 139(1) – contention of the Assessee is that PF and ESI contribution of Employees, if paid within the due date of filing of return of income u/s 139(1) of the Act, then the same is allowable for deduction as per section 43B – | HELD THAT:- We are of the considered view that as in the instant case, the employees contribution qua ESI & PF for the Asst. Year: 2019-20 has been deposited before the due date of furnishing the return of income u/sec. 139(1) of the Act and therefore cannot be subjected to disallowance, consequently, the addition sustained by the ld. Commissioner (NFAC) is liable to be deleted. – – Decided in favour of assessee. |
| 29 | S.V. Engineering Constructions India (P) Ltd. Vs DCIT (ITAT Visakhapatnam), Appeal Number : ITA No. 130/Viz/2021, Date of Judgement/Order : 23/09/2021 | Intimation u/s 143(1) – Delayed employees contribution towards P.F and ESI | HELD THAT:- 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 and ESI.
As in the case of Redington (India) Ltd.[2020 (12) MADRAS HIGH COURT] 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 [ITAT VISAKHAPATNAM] held that debatable issues are not permitted to be made adjustments while processing the return of income u/s 143(1) – Thus we hold that the addition made by the CPC u/s 143(1) is unsustainable, accordingly deleted. The appeal of the assessee is allowed Addition u/s 43B – This Tribunal has consistently viewed that the employees contribution to PF and ESI is allowable deduction if the same is paid before the due date of filing the return of income. See M/S ESSAE TERAOKA PVT LTD VERSUS DEPUTY COMMISSIONER OF INCOME-TAX [2014 KARNATAKA HIGH COURT] – Decided in favour of assessee. |
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