Case Number: ITA 1600/DEL/2020
Appellant: Pawan Kumar Janghu, Gurgaon
Respondent: DCIT CPC, Bengaluru
Assessment Year: 2018-19
Case Filed On: 2020-09-16
Order Type: Final Tribunal Order
Date of Order: 2021-07-30
Pronounced On: 2021-07-30
In this case, Pawan Kumar Janghu (the appellant) filed an appeal against the addition made by the Deputy Commissioner of Income Tax (DCIT) Centralized Processing Centre (CPC) Bengaluru under Section 143(1) of the Income Tax Act, 1961. The addition pertained to the assessment year 2018-19, where the appellant was taxed for the delay in depositing employees’ contributions to Provident Fund (PF) and Employee State Insurance (ESI).
The appellant raised the following grounds of appeal:
The case was heard by Shri Kul Bharat, Judicial Member of the Income Tax Appellate Tribunal (ITAT) Delhi “SMC-1” Bench through video conferencing on 20.07.2021. The order was pronounced on 30.07.2021.
The learned counsel for the appellant, Sh. M.R. Sahu, argued that the authorities below were not justified in disallowing the claim and making the addition. He submitted that the CIT(A) relied on the decision of the Delhi High Court in the case of CIT vs Bharat Hotels Ltd. [2019] 103 taxmann.com 295 / 410 ITR 417 (Delhi) without considering the judgment in CIT vs AIMIL Ltd. [2010] 321 ITR 508 (Delhi) and the judgment in Pr.CIT vs Pro Interactive Service (India) Pvt. Ltd. in ITA No.983/2018, pronounced on 10.09.2018, which were in favor of the appellant.
After hearing the submissions and perusing the material on record, the Tribunal found that the appellant’s arguments had merit. The Tribunal noted that the Delhi High Court in the case of Pr.CIT vs Pro Interactive Service (India) Pvt. Ltd. held that delayed payment of employees’ contributions to PF and ESI should be allowed as an expenditure if paid before the due date of filing the return. This decision was followed by several Co-ordinate Benches of the Tribunal.
The Tribunal observed that the CIT(A) did not consider the judgment in CIT vs AIMIL Ltd., which was binding and favored the appellant. The Tribunal held that the legislative intent was to allow the expenditure when the payment is made, and delayed payment should not be treated as deemed income under Section 2(24)(x) of the Act.
Therefore, the Tribunal directed the Assessing Officer to allow the claim of the appellant and delete the addition of Rs. 17,34,620 on account of delay in depositing employees’ contributions to PF and ESI.
The appeal of the appellant was allowed.
This case highlights the importance of considering judicial precedents and the legislative intent behind statutory provisions. The judgment reinforces the principle that delayed payment of employees’ contributions to PF and ESI should be allowed as an expenditure if made before the due date of filing the return.
Overall, this case serves as a reminder for taxpayers and tax authorities to ensure that assessments and appeals are based on relevant judicial precedents and legislative intent to avoid unjustified additions and disallowances.
Order pronounced in the open court on this the 30th day of July, 2021.
Judicial Member: (Kul Bharat)
Dated: 30/07/2021
Copy forwarded to:
TRUE COPY
ASSISTANT REGISTRAR
ITAT NEW DELHI
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform