Case Number: ITA 1601/DEL/2021
Appellant: Singla Motors Pvt. Ltd., Karnal
Respondent: DCIT, Circle, Karnal
Assessment Year: 2019-2020
Case Filed on: 2021-11-01
Order Type: Final Tribunal Order
Date of Order: 2022-05-18
Pronounced on: 2022-05-18
In the matter of Singla Motors Pvt. Ltd. versus DCIT, Circle, Karnal, the appeal was filed by Singla Motors Pvt. Ltd. against the order of the Deputy Commissioner of Income Tax (DCIT), Circle, Karnal. The case involves the disallowance of employee contributions to Provident Fund (PF) and Employees’ State Insurance (ESI) under Section 36(1)(va) of the Income Tax Act for the assessment year 2019-20.
The case was heard before the Delhi Bench ‘G’ of the Income Tax Appellate Tribunal, with Judicial Member Shri Kul Bharat and Accountant Member Shri Pradip Kumar Kedia presiding. The appeal was taken up for hearing on 18.05.2022 and the decision was pronounced on the same day.
The appellant was not represented at the hearing, as no one appeared despite the notice issued by the registry. The appellant contended that all contributions towards PF and ESI were made before the due date of filing the income tax return.
The respondent, represented by Sr. DR Shri Sanjay Kumar Nargas, supported the orders of the authorities below, arguing that the disallowance was justified based on the amendments introduced by the Finance Act, 2021.
After considering the submissions and reviewing the material on record, the tribunal made the following observations:
The tribunal noted that the Central Processing Centre (CPC), Bengaluru, while passing the intimation under Section 143(1), disallowed employee contributions to PF and ESI, which was sustained by the CIT(A) observing that the amendments introduced by the Finance Act, 2021, by way of Explanation 2 and Explanation 4 to the provisions of Section 36(1)(va) and 43B are retrospective in nature.
The tribunal referred to the decision of the Tribunal in the case of Devendra Yadav vs. ITO (CPC) in ITA No. 1100/Del/2021 dated 23.12.2021, which held that delayed payment of contributions to PF and ESI, including employee contributions, is allowable as a deduction under Section 43B read with Section 36(1)(va) if paid before the due date for filing the return of income under Section 139(1) of the Act. The tribunal observed that the amendments introduced by the Finance Act, 2021, apply prospectively from the assessment year 2021-22 and not retrospectively.
The tribunal held that the disallowance of employee contributions to PF and ESI made by the Assessing Officer was not justified, as the appellant had paid the contributions before the due date for filing the return of income. The tribunal directed the Assessing Officer to delete the disallowance.
The tribunal allowed the appeal filed by Singla Motors Pvt. Ltd., granting relief on the ground of disallowance of PF and ESI contributions. The order was pronounced in the open court on May 18, 2022.
Order:
In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on May 18, 2022.
—
(PRADIP KUMAR KEDIA)
ACCOUNTANT MEMBER
(KUL BHARAT)
JUDICIAL MEMBER
Date: May 18, 2022
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