Case Number: ITA 998/DEL/2021
Appellant: Super Snacks Pvt. Ltd., Delhi
Respondent: CPC ITD, Bengaluru
Assessment Year: 2019-20
Result: 2019-20
Case Filed on: 2021-08-23
Order Type: Final Tribunal Order
Date of Order: 2021-11-17
Pronounced on: 2021-11-17
This case concerns an appeal filed by Super Snacks Pvt. Ltd. against the order dated 30.06.2021 passed by the National Faceless Appeal Centre (NFAC), Delhi, for the assessment year 2019-20. The appeal focuses on the disallowance of employees’ contributions to Provident Fund (PF) and Employee State Insurance (ESI) due to late deposit under Section 36(1)(va) read with Section 43B of the Income Tax Act, 1961.
The appellant is a company that filed its return of income for AY 2019-20 electronically on 27.09.2019, declaring a total loss of Rs. 1,07,669/-. The Central Processing Centre (CPC), Bengaluru processed the return under Section 143(1) of the Income Tax Act, making an addition of Rs. 4,51,593/- on account of the late payment of PF/ESI, resulting in a total income of Rs. 3,43,924/-.
The appellant challenged the disallowance before the CIT(A), arguing that the contributions were made before the due date of filing the income tax return (30.09.2019) and therefore should not be disallowed. However, the CIT(A) upheld the CPC’s adjustment, stating that the payments were not made before the statutory due dates prescribed under the PF and ESI Acts.
The appellant then appealed to the Income Tax Appellate Tribunal (ITAT). The key grounds of appeal were:
During the hearing, the Ld. Senior Departmental Representative (Sr. DR) supported the CIT(A)’s decision. However, the Tribunal considered the appellant’s argument and the binding precedent set by the Delhi High Court in PCIT vs. Pro Interactive Service (India) Pvt. Ltd. (ITA No. 983/2018), where it was held that the legislative intent was to allow expenditure only when payment is actually made, and belated payments to PF/ESI should not be treated as income of the employer under Section 2(24)(x) of the Act.
The Tribunal, following the jurisdictional High Court’s judgment, directed the Assessing Officer to delete the disallowance. The grounds raised by the appellant were allowed, leading to the conclusion that the disallowance of Rs. 4,51,593/- for the delayed deposit of employees’ contributions to PF/ESI was unjustified.
Order: The appeal of the appellant is allowed.
Order Pronounced in the Open Court on 17th November, 2021.
-Sd/- (R.K. Panda, Accountant Member)
Date: 17th November, 2021
Copy forwarded to:
Assistant Registrar
ITAT, New Delhi
Super Snacks Pvt. Ltd. vs. CPC ITD Bengaluru: Late Payment of PF/ESI for Assessment Year 2019-20
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