2019 (11) TMI 459 - AT - Income Tax

Tribunal rules in favor of Assessee, disallowances under section 43B of Income Tax Act deleted

The Tribunal allowed the appeal filed by the Assessee, directing the Assessing Officer to delete the disallowances made under section 43B of the Income ... Disallowance made in respect of remittance of employees contribution towards EPF/ESI - Addition u/s 36(1)(va) r.w.s. 2(24)(x) - HELD THAT:- Tribunal has rightly relied on the decision of the Supreme Court in the case of CIT V. Alom Extrusions Ltd. [2009 (11) TMI 27 - SUPREME COURT] whereby, the Supreme Court held that omission of second proviso to Section 43B and amendment to first proviso by Finance Act, 2003 are curative in nature and are effective retrospectively, i.e., with effect from 1.4.1988 i.e., the date of insertion of first proviso. The Delhi High Court in the case of CIT V. Aimil Ltd. [2009 (12) TMI 38 - DELHI HIGH COURT] held that if the assessee had deposited employee's contribution towards Provident Fund and ESI after due date as prescribed under the relevant Act, but before the due date of filing of return under the Income Tax Act, no disallowance could be made in view of the provisions of Section 43B as amended by Finance Act, 2003. Appeal filed by the Assessee is allowed. Issues: Disallowance of remittance of employees' contribution towards EPF/ESI under section 36(1)(va) r.w.s. 2(24)(x) of the Income Tax Act, 1961.Issue Analysis:1. The appeal was filed against the order of the ld. Commissioner of Income Tax (Appeals) confirming the disallowance made in respect of remittance of employees' contribution towards EPF/ESI.2. The Assessing Officer disallowed the total amount under section 36(1)(va) r.w.s. 2(24)(x) of the Act due to a delay in the payment of Provident Fund and ESI for the relevant assessment year.3. The ld. CIT(A) upheld the disallowance, citing the decision of the Hon'ble Jurisdictional High Court in a similar case.4. The Assessee relied on a decision of the Hon'ble High Court of Madras and argued for the deletion of the disallowance, while the ld. DR supported the lower authorities' orders.5. The Tribunal considered the arguments, noting the disallowed amount for belated remittance of employees' contribution to PF and ESI as income under the Act. The assessee contended that the entire amount was remitted before the due date for filing the income tax return, thus should be allowed as a deduction under section 43B of the Act.6. The Tribunal referred to the decision of the Hon'ble Jurisdictional High Court in a similar case, which held that if the employees' contribution towards Provident Fund and ESI was paid before the due date for filing the return, no disallowance could be made under section 43B of the Act.7. The Tribunal directed the Assessing Officer to delete the disallowances made under section 43B of the Act based on the above decision, allowing the appeal filed by the Assessee.This detailed analysis of the judgment highlights the issues involved, the arguments presented by both parties, the legal provisions applied, and the final decision rendered by the Tribunal based on relevant case laws and precedents.