This case, ITA No.1577/DEL/2021, was filed by Nitigya Ready Mix Pvt. Ltd., Gurgaon, against the DCIT CPC, Bangalore, Karnataka, for the assessment year 2018-2019. The case was filed on 2021-10-29, and the final tribunal order was pronounced on 2022-02-22 by Shri Kul Bharat, Judicial Member.
Nitigya Ready Mix Pvt. Ltd., the appellant, filed its return of income on 25.10.2018, declaring an income from business/profession at Rs.7,91,692/-. During the processing of the return under section 143(1) of the Income Tax Act, 1961, the DCIT CPC disallowed a sum of Rs.1,25,090/- on account of late payment of PF and ESI, determining the income from business/profession at Rs.9,16,780/-.
The appellant raised the following grounds of appeal:
The tribunal, after hearing the rival contentions and perusing the material on record, upheld the disallowance made by the DCIT CPC. The tribunal relied on several judicial precedents, including decisions from the Delhi High Court and other high courts, which clarified that the provisions of section 36(1)(va) and section 43B operate in different fields.
The amendments brought in by the Finance Act 2021, which added Explanation 2 to section 36(1)(va) and Explanation 5 to section 43B, were considered by the tribunal. These explanations clarified that the provisions of section 43B do not apply to the determination of the due date under section 36(1)(va). Therefore, any delay in depositing the employees’ contribution beyond the due date specified under the relevant Act would disqualify the deduction under section 36(1)(va).
The tribunal concluded that the appeal by Nitigya Ready Mix Pvt. Ltd. is covered by the judgments of the Delhi High Court and other precedents, which upheld the disallowance for delayed payment of employees’ contributions towards PF and ESI. Accordingly, the tribunal directed the Assessing Officer to delete the disallowance, allowing the grounds raised by the appellant.
The final order pronounced on 22nd February 2022 by the Judicial Member Shri Kul Bharat stated that the appeal by Nitigya Ready Mix Pvt. Ltd. is allowed, and the disallowance made by the DCIT CPC is to be deleted.
Order pronounced in the open Court on 22nd February, 2022.
Kul Bharat
Judicial Member
Assistant Registrar
ITAT, New Delhi
Nitigya Ready Mix Pvt. Ltd. vs DCIT CPC Bangalore: Disallowance Under Section 36(1)(va)
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