Case Number: ITA 1423/DEL/2021
Appellant: Talent Manpower Placement Agency, New Delhi
Respondent: AO Ward 54(1), Delhi
Assessment Year: 2018-2019
Case Filed On: 2021-10-11
Order Type: Final Tribunal Order
Date of Order: 2022-09-07
Pronounced On: 2022-09-07
The appellant, Talent Manpower Placement Agency, filed an appeal against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), dated 18.08.2021 for the assessment year 2018-19. The appeal challenged the disallowance of employees’ contributions to ESI and PF.
During the hearing on 07.09.2022, the assessee was not represented, and no adjournment application was moved. The notice of hearing sent to the address provided by the assessee was returned unserved with the remark “No such company.” The appeal proceeded based on the submissions of the Departmental Representative (DR), Shri M. Baranwal.
The Centralized Processing Centre (CPC) in Bangalore had disallowed the employees’ contributions to ESI and PF while processing the return under Section 143(1) of the Income-tax Act, 1961. The NFAC upheld this disallowance based on various case laws. The DR argued that the amendments introduced by the Finance Act, 2021, in Sections 36(1)(va) and 43B, are clarificatory and retrospective.
The ITAT Bench, comprising Shri Challa Nagendra Prasad, Judicial Member, and Dr. B.R.R. Kumar, Accountant Member, reviewed the case. It was noted that the issue is highly debatable and that similar matters have been ruled in favor of the assessee in prior judgments. Key cases referenced include CIT vs. AIMIL Ltd. and CIT vs. Alom Extrusions Limited.
The Supreme Court’s ruling in M.M. Aqua Technologies Ltd. vs. CIT was cited, clarifying that retrospective provisions in tax laws are not presumed to be retrospective unless they alter the law as it stood previously. The ITAT also referred to decisions from various High Courts and Tribunals, supporting the stance that no disallowance is warranted if contributions are paid before the due date of filing the return.
The Tribunal concluded that no disallowance is warranted for delayed payment of employees’ contributions to ESI and PF if the payments are made before the due date for filing the return of income. Consequently, the appeal of the assessee was allowed.
Order:
Order pronounced in the open court on 07.09.2022.
Signed by:
(B. R. R. KUMAR)
ACCOUNTANT MEMBER
(C. N. PRASAD)
JUDICIAL MEMBER
Copy forwarded to:
Assistant Registrar
ITAT, New Delhi
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