Appellant: SKY I T INFRATECH PVT. LTD., 202, 2nd Floor, Plot No. 2, DDA Tower, Sector : 5, Rohini, New Delhi – 110 085.
Respondent: DCIT, CPC, Bengaluru.
PAN No. AAUCS7180A
Assessee by: Shri Prateek & Shri Kalpit, C.A.
Revenue by: Shri Om Parkash, Sr. D.R.
Date of hearing: 19/05/2022
Pronouncement on: 25/05/2022
PER C. N. PRASAD, J.M.:
These two appeals are filed by the assessee against the order of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) dated 28.06.2021 for assessment years 2018-19 and 2019-20 in sustaining the disallowance of Rs.1,66,109/- and Rs.1,95,642/- under Section 36(1)(va) of the Income Tax Act, 1961 (the Act) in respect of employees’ contribution to ESI and PF deposited after the due date under the relevant Acts, but before the due date for filing return of income under Section 143(1) of the Act.
The ld. Counsel for the assessee submitted that the contribution to PF and ESI were remitted to Govt. account before due date for filing return of income by the assessee and, therefore, the issue is squarely covered by the decision of the jurisdictional High Court in the case of CIT Vs. AIMIL Ltd. 321 ITR 508. Reliance was also placed on the decision of the Hon’ble Supreme Court in the case of M.M. Aqua Technologies Ltd. Vs. CIT (Civil Appeal Nos. 4742 – 4743 of 2021 dated 11.08.2021).
The ld. DR submits that while processing the returns in both the cases under Section 143(1) on 28.06.2021 of the Act, the Centralized Processing Centre (CPC) Bangalore, sustained the employees’ contribution to ESI and PF and the ld. CIT (Appeals) also sustaining the disallowance relying on various case laws referred to in the order of the ld. CIT (Appeals). The ld. DR submits that the amendment brought in by the Finance Act, 2021 in Sections 36(1)(va) and 43B of the Act by way of inserting Explanation 2 and Explanation 5 respectively are clarificatory in nature and, therefore, have retrospective applicability. The ld. DR strongly supported the orders of the ld. CIT (Appeals) in sustaining the disallowance made under Section 36(1)(va) of the Act in respect of employees’ contribution made to ESI and PF.
I have heard the submissions of both the parties, perused the orders of the authorities below. While processing the returns under Section 143(1) of the Act, no disallowance towards contribution to employees’ PF and ESI is warranted as this issue is highly debatable in nature. Even otherwise I find that the issue in both the appeals is squarely covered by the decision of the jurisdictional High Court in the case of CIT Vs. AIMIL Ltd. 321 ITR 508. Ratio of this decision squarely applies to the facts of the assessee’s case.
Reliance is also placed on the decision of Hon’ble Supreme Court in the case of CIT Vs. M/s. Alom Extrusions Limited (2009) 319 ITR 306 (SC). Grounds raised by the assessee are allowed.
The Hon’ble Supreme Court in the case of M.M. Aqua Technologies Ltd. Vs. CIT (supra) held that retrospective provision in a Tax Act which is for the removal of doubts cannot be presumed to be retrospective even where such language is used if it alters or changes the law as it earlier stood. The Hon’ble Supreme Court also observed that this was the position as held by the apex court in the case of Sedco Forex International Drill. Inc Vs. CIT (2005) 12 SCC 717. The Amendments made to Section 36 and Section 43B by insertion of Explanations 2 and 5 respectively. In these Sections it is clarified that for the removal of doubts the provisions of these Sections were amended. Therefore, the ratio of the decision of the Hon’ble Supreme Court in the case of M.M. Aqua Technologies Ltd. Vs. CIT (supra) squarely applies.
Further I also observe that recently this Tribunal in a batch of appeals in the cases of Raj Kumar Vs. ITO CPC Bangaluru in ITA. No. 1392/Del/2021 and other appeals by order dated 28.02.2022 considering various decisions rendered by various High Courts and the Tribunals held that the amendment brought in by Finance Act, 2021 is effective from 1.04.2021 and no disallowance is called for, on belated payment of employees’ contribution to ESI and PF in case the assessee deposited the said contribution before due date for filing of return of income under Income Tax Act.
Following the said decisions, I direct the Assessing Officer / CPC to delete the disallowances in both the appeals made to employees’ contribution to EPF and ESI as the same were remitted before the due date of filing of return of income.
In the result, both the appeals of the assessee are allowed.
Order pronounced in the open court on: 25/05/2022
SD/-
(C. N. PRASAD)
JUDICIAL MEMBER
Dated: 25/05/2022
*MEHTA*
Copy forwarded to:
1. Appellant;
2. Respondent;
3. CIT;
4. CIT (Appeals);
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT, New Delhi.
Date of dictation: 19.05.2022
Date on which the typed draft is placed before the dictating member: 20.05.2022
Date on which the typed draft is placed before the other member: 25.05.2022
Date on which the approved draft comes to the Sr. PS/ PS: 25.05.2022
Date on which the fair order is placed before the dictating member for pronouncement: 25.05.2022
Date on which the fair order comes back to the Sr. PS/ PS: 25.05.2022
Date on which the final order is uploaded on the website of ITAT: 25.05.2022
Date on which the file goes to the Bench Clerk: 25.05.2022
Date on which the file goes to the Head Clerk:
The date on which the file goes to the Assistant Registrar for signature on the order:
Date of dispatch of the order:
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