Case Number: ITA 849/DEL/2021
Appellant: Ajay Mehta, Gurgaon
Respondent: ADIT, CPC, Bangalore
Assessment Year: 2019-20
Result: Appeal Allowed
Case Filed on: 2021-07-13
Order Type: Final Tribunal Order
Date of Order: 2021-10-29
Pronounced on: 2021-10-29
Ajay Mehta, a resident of Gurgaon, filed an appeal against the order of the Additional Director of Income-tax (ADIT), CPC, Bangalore, regarding the assessment year 2019-20. The primary issue was the disallowance of Rs. 6,94,463/- due to delayed deposits of employees’ contributions towards Provident Fund (PF) and Employees’ State Insurance Corporation (ESIC).
The case was heard by the Delhi ‘SMC’ Bench of the Income Tax Appellate Tribunal (ITAT), with Shri Anil Chaturvedi, Accountant Member, presiding over the matter. The hearing took place on 05.10.2021, and the order was pronounced on 29.10.2021.
The appellant, Ajay Mehta, represented by Shri Rakesh Kumar, C.A., argued that the delayed contributions towards PF and ESIC were deposited with the appropriate authorities before the filing of the income tax return, thereby qualifying for deduction under Section 43B of the Income-tax Act, 1961. The Assessing Officer had disallowed these contributions under Section 36(1)(va) of the Act, and the CIT(A) upheld this decision.
The appellant’s counsel presented a statement showing the delay in deposits and emphasized that all contributions were made before filing the return. He cited the case of Azamgarh Steel & Power vs CPC and the Delhi High Court’s decision in CIT vs. AIMIL Ltd., which supported the allowance of such contributions if deposited before the due date of filing the return.
The Revenue, represented by Shri R. K. Gupta, Sr. D.R., supported the lower authorities’ decisions and referred to a decision in Vedvan Consultants Pvt. Ltd. vs DCIT. The Revenue also argued that the amendment by the Finance Act 2021 clarified that Section 43B would not apply to such sums.
The Tribunal reviewed the facts and the legal precedents, noting that several benches of the Tribunal and various High Courts had consistently held that delayed deposits of PF/ESIC contributions are allowable if made before filing the return. The Tribunal also considered the “notes on clauses” to the Finance Bill 2021, which specified that the amendment would take effect from 1st April 2021 and apply to assessment years 2021-22 and onwards, making it inapplicable to the assessment year in question.
The Tribunal found that no disallowance was warranted for the assessment year 2019-20, as the contributions were deposited before filing the return. It directed the Assessing Officer to delete the addition, thus allowing Ajay Mehta’s appeal.
In conclusion, ITA No. 849/DEL/2021 was allowed, and the order pronounced on 29th October 2021 provided relief to the appellant, Ajay Mehta, by reversing the disallowance of PF/ESIC contributions.
Order pronounced in the open court on 29th October 2021.
Sd/- (ANIL CHATURVEDI)
ACCOUNTANT MEMBER
Date: 29th October 2021
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR: ITAT
Assistant Registrar, ITAT, New Delhi
Ajay Mehta vs ADIT, CPC, Bangalore: Reversal of Disallowance of PF/ESIC Contributions
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