Case Number: ITA 1604/DEL/2021
Appellant: Guardian India Solutions Pvt. Ltd., Delhi
Respondent: ITO, Ward 10(4), New Delhi
Assessment Year: 2019-2020
Case Filed on: 2021-11-01
Order Type: Final Tribunal Order
Date of Order: 2022-03-09
Pronounced on: 2022-03-09
In the matter of Guardian India Solutions Pvt. Ltd. versus ITO, Ward 10(4), New Delhi, the appeal was filed by Guardian India Solutions Pvt. Ltd. against the order of the Income Tax Officer (ITO), Ward 10(4), New Delhi. The case involves the disallowance of employee contributions to Provident Fund (PF) and Employees’ State Insurance (ESI) under Section 36(1)(va) of the Income Tax Act for the assessment year 2019-20.
The case was heard before the Delhi Bench “SMC” of the Income Tax Appellate Tribunal, with Judicial Member Shri Kul Bharat presiding. The appeal was taken up for hearing on 28.02.2022 and the decision was pronounced on 09.03.2022.
The appellant, represented by Shri P. Roychoudhary, contended that the issue in this appeal is squarely covered in favor of the assessee by the judgment of the Hon’ble Jurisdictional High Court. The appellant reiterated the submissions made in the brief synopsis, emphasizing that all contributions towards PF and ESI were made before the due date of filing the income tax return.
The respondent, represented by Sr. DR Shri Sanjiv Mahajan, supported the orders of the authorities below, arguing that the disallowance was justified based on the amendments introduced by the Finance Act, 2021.
After considering the submissions and reviewing the material on record, the tribunal made the following observations:
The tribunal noted that the Centralized Processing Centre (CPC), Bengaluru, while passing the intimation under Section 143(1), disallowed employee contributions to PF and ESI, which was sustained by the CIT(A) observing that the amendments introduced by the Finance Act, 2021, by way of Explanation 2 and Explanation 4 to the provisions of Section 36(1)(va) and 43B are retrospective in nature.
The tribunal referred to the decision of the Tribunal in the case of CIT vs. AIMIL Ltd. (2010) 321 ITR 508 (Delhi), which held that delayed payment of contributions to PF and ESI, including employee contributions, is allowable as a deduction under Section 43B read with Section 36(1)(va) if paid before the due date for filing the return of income under Section 139(1) of the Act. The tribunal observed that the amendments introduced by the Finance Act, 2021, apply prospectively from the assessment year 2021-22 and not retrospectively.
The tribunal held that the disallowance of employee contributions to PF and ESI made by the Assessing Officer was not justified, as the appellant had paid the contributions before the due date for filing the return of income. The tribunal directed the Assessing Officer to delete the disallowance.
The tribunal allowed the appeal filed by Guardian India Solutions Pvt. Ltd., granting relief on the ground of disallowance of PF and ESI contributions. The order was pronounced in the open court on March 09, 2022.
Order:
In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on March 09, 2022.
—
(KUL BHARAT)
JUDICIAL MEMBER
Date: March 09, 2022
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT, NEW DELHI
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