Case Number: ITA 1039/DEL/2021
Appellant: Micro Electrics Pvt. Ltd., Meerut
Respondent: ACIT, Circle-1, Meerut
Assessment Year: 2018-19
Result: 2018-19
Case Filed on: 2021-08-31
Order Type: Final Tribunal Order
Date of Order: 2022-05-24
Pronounced on: 2022-05-24
The case of Micro Electrics Pvt. Ltd., Meerut versus ACIT, Circle-1, Meerut revolves around the disallowance of delayed payments towards Employees’ State Insurance Corporation (ESIC) and Provident Fund (PF) contributions for the assessment year 2018-19. The appellant, Micro Electrics Pvt. Ltd., challenged the addition made by the Central Processing Centre (CPC), Bangalore, and upheld by the CIT(A), National Faceless Appeal Centre (NFAC).
Micro Electrics Pvt. Ltd. filed its return of income for the assessment year 2018-19, declaring a total income of Rs.5,08,030/-. The return was processed under section 143(1) of the Income Tax Act, 1961, on 16th October 2019. The CPC, Bangalore, disallowed Rs.74,574/- on account of delayed payment of employees’ contributions to ESIC and PF, citing that the payments were deposited after the due dates prescribed under the respective Acts.
The grounds raised by the appellant were as follows:
1. The Ld. CIT(A) erred in law by not accepting the appellant’s submissions regarding the non-applicability of the provisions for depositing ESIC and PF funds as per the Budget 2021 amendments.
2. The Ld. CIT(A) ignored the case laws cited by the appellant, which supported the appellant’s position on the matter.
3. The appellant prayed for the acceptance of returned income and the deletion of the disallowance made by CPC, Bangalore.
The Tribunal reviewed the arguments and submissions of both parties. The appellant’s counsel argued that the issue of disallowance of ESIC and PF contributions was covered by various case laws in favor of the assessee. The Ld. Counsel cited precedents including the judgment of the Hon’ble Delhi High Court in the case of PCIT vs Pro Interactive Service (India) Pvt. Ltd. (ITA No.983/2018), which held that the legislative intent was to allow the expenditure when the payment was actually made, and not to treat belated payment as deemed income of the employer.
The Ld. Sr. DR, representing the Revenue, supported the disallowance and the decision of the CIT(A).
The Tribunal noted that the issue of disallowance of employees’ contributions to ESIC and PF due to delayed payment was covered by the judgment of the Hon’ble Delhi High Court in the case of PCIT vs Pro Interactive Service (India) Pvt. Ltd.. The Tribunal followed this binding precedent and directed the Assessing Officer to delete the disallowance of Rs.74,574/-. The grounds raised by the appellant were allowed.
In conclusion, the ITAT, Delhi Bench, provided a fair judgment by allowing the appeal of Micro Electrics Pvt. Ltd. The disallowance of delayed ESIC and PF payments was deleted, ensuring adherence to the legislative intent and judicial precedents for the assessment year 2018-19.
Pronounced in the open court on 24th May 2022.
Signed:
(KUL BHARAT)
Judicial Member
Dated: 24th May 2022
Copy forwarded to:
Asstt. Registrar, ITAT, New Delhi
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