ITAT Chennai partially allows appeal, directs AO to delete EPF disallowance & reevaluate lease rent

The ITAT Chennai partially allowed the appeal, directing the Assessing Officer to delete the disallowance of EPF contribution and reevaluate the disallowance of lease rent and interest paid to NBFC based on the provided evidence.

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Issues:
1. Disallowance of employee's contribution to EPF.
2. Disallowance of expenses for lease rent and interest paid to NBFC.

Issue 1: Disallowance of employee's contribution to EPF:
The appeal concerns the disallowance of employee's EPF contribution amounting to Rs. 21,77,123 due to belated remittance by the assessee. The Assessing Officer disallowed the amount under section 36(1)(va) r.w.s. 2(24)(x) of the Act. The assessee contended that the remittance was made before the due date for filing the return and should be allowed as a deduction. The ITAT Chennai noted that the decision of the ld. CIT(A) was based on a judgment that was subsequently withdrawn by the Division Bench of the Madras High Court. Referring to various case laws, including the decision in CIT v. Industrial Security & Intelligence India Pvt. Ltd., the ITAT directed the Assessing Officer to delete the disallowance of EPF contribution.

Issue 2: Disallowance of lease rent and interest paid to NBFC:
The second issue pertains to the disallowance of expenses claimed by the assessee for lease rent and interest paid to NBFC amounting to Rs. 37,65,551 due to non-deduction of tax at source. The Assessing Officer disallowed the lease rent as no evidence of the payee obtaining a certificate under section 197 was provided. The ITAT directed the Assessing Officer to reexamine whether the recipient qualifies for exemption under section 10(23BBA) or if the recipient has offered the rental receipt for taxation. Regarding the interest paid to NBFC, the ITAT instructed the assessee to produce certificates from the recipients to verify the declaration of income and tax payment, allowing the deduction based on the decision in CIT v. Ansal Land Mark Township P. Ltd. The appeal was partly allowed for statistical purposes.

In conclusion, the ITAT Chennai partially allowed the appeal, directing the Assessing Officer to delete the disallowance of EPF contribution and reevaluate the disallowance of lease rent and interest paid to NBFC based on the provided evidence.

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