Case Number: ITA 1781/DEL/2021
Appellant: VS Rubber Pvt. Ltd., Meerut
Respondent: ACIT Circle 1(2)1, Meerut
Assessment Year: 2019-20
Case Filed On: November 29, 2021
Order Type: Final Tribunal Order
Date of Order: April 28, 2022
Pronounced On: April 28, 2022
The case was heard by the Delhi Bench “SMC” of the Income Tax Appellate Tribunal, which included:
The appellant, VS Rubber Pvt. Ltd., filed an appeal against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, dated October 6, 2021. The appeal was in response to the disallowance made under Section 36(1)(va) concerning employees’ contributions to PF and ESI for the assessment year 2019-20.
Assessee By: None
Revenue By: Shri Om Prakash, Sr. DR
The hearing was scheduled for March 15, 2022. Despite issuing a notice via Speed Post, the appellant did not appear, nor was any adjournment sought. The notice was returned unserved with the endorsement that the company had left the given address.
In the absence of representation from the appellant, the tribunal proceeded with the hearing based on the submissions made by the Senior Departmental Representative (DR).
The tribunal examined the orders of the authorities below. The Central Processing Centre (CPC), Bengaluru, while passing the intimation under Section 143(1), disallowed the employees’ contributions towards PF and ESI. This disallowance was sustained by the Commissioner of Income Tax (Appeals), who observed that the amendments brought by the Finance Act, 2021, were retrospective and clarificatory in nature.
The tribunal referenced several decisions, including the case of Devendra Yadav vs. ITO (CPC) and Vansh Jain vs. DCIT, where similar disallowances were addressed. The tribunal held that the amendments to Sections 36(1)(va) and 43B of the Income Tax Act, brought by the Finance Act, 2021, apply prospectively from the assessment year 2021-22. Therefore, these amendments do not apply to the assessment year 2019-20.
The tribunal concluded that the employees’ contributions to PF and ESI, if paid before the due date for filing the income tax return under Section 139(1), should be allowed as deductions. Consequently, the disallowance made by the CPC and sustained by the CIT (A) was not justified.
In light of these findings, the tribunal directed the Assessing Officer to delete the disallowance of employees’ contributions to PF and ESI and recompute the income of the assessee.
The appeal of VS Rubber Pvt. Ltd. was allowed, and the disallowance of employees’ contributions to PF and ESI was directed to be deleted.
The official order was signed and dated on April 28, 2022, by the tribunal member:
Challa Nagendra Prasad
Judicial Member
Order Date: April 28, 2022
The order was distributed to:
The case was initially filed by VS Rubber Pvt. Ltd. challenging the disallowance of employees’ contributions to PF and ESI for the assessment year 2019-20. The appellant sought relief from the disallowance made by the CPC and sustained by the CIT (A), arguing that the contributions were paid before the due date for filing the return of income under Section 139(1).
VS Rubber Pvt. Ltd. Appeal Disallowed for Assessment Year 2019-20
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