Case Number: ITA 1752/DEL/2020
Appellant: BMK Business Hotels & Resorts Pvt. Ltd., New Delhi
Respondent: ADIT CPC, Bangalore
Assessment Year: 2018-19
Case Filed On: 2020-10-22
Order Type: Final Tribunal Order
Date of Order: 2022-04-21
Pronounced On: 2022-04-21
This case involves an appeal filed by BMK Business Hotels & Resorts Pvt. Ltd. against the ADIT CPC, Bangalore for the assessment year 2018-19. The appeal, registered as ITA 1752/DEL/2020, was filed on October 22, 2020, and concerns the disallowance of payment of employees’ contribution towards Provident Fund (PF) and Employees’ State Insurance (ESI) under section 36(1)(va) read with section 43B of the Income-tax Act, 1961.
The case was heard by the Delhi Bench ‘SMC’ of the Income Tax Appellate Tribunal (ITAT) on April 21, 2022, with the order pronounced on the same day. The bench comprised Judicial Member Shri Amit Shukla.
The primary ground of appeal was the disallowance of the payment of employees’ contributions to PF and ESI, which were made beyond the due date prescribed under the relevant Acts but before the filing of the return of income.
The appellant, represented by Advocate Shri Manish Malik, argued that the CPC had made a disallowance of Rs.2,20,135/- via intimation under section 143(1) of the Act. The NFAC upheld the disallowance, referring to various judgments that supported the legal proposition that the amendment brought by the Finance Act, 2021, which inserted Explanation 5 in section 43B and amended clause (va) of section 36(1), is retrospective and clarificatory.
The tribunal noted that the issue is covered by a series of decisions from various High Courts, including the Delhi High Court. These decisions establish that if the payment of employees’ contributions to PF/ESI is made before the due date of filing the return of income under section 139(1), then no disallowance can be made.
The tribunal cited several precedents, including:
Based on these precedents, the tribunal held that no disallowance could be made for the assessment year 2018-19, as the payments were made before the due date of filing the return. The disallowance sustained by the CIT(A) was directed to be deleted, and the appeal filed by the assessee was allowed.
The tribunal’s order was pronounced on April 21, 2022, by Judicial Member Shri Amit Shukla, directing the deletion of the disallowance and allowing the appeal filed by BMK Business Hotels & Resorts Pvt. Ltd.
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BMK Business Hotels & Resorts vs. ADIT CPC, Bangalore – 2018-19 – Employees’ Contribution to PF/ESI
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