2022 (5) TMI 155 - AT - Income Tax

Tax Appeals Allowed: Deductions for late PF/ESI/EPF deposits permitted pre-ITR filing. Importance of legislative intent emphasized.

Benson Movers Pvt. Ltd. Versus Circle – 4 (2) New Delhi, Bhuvan Sharma Versus Ward – 71 (2) Delhi And Aggarwal Sweet Corner Pvt. Ltd. Versus ACIT Circle – 1 (2) New Delhi

The Tribunal allowed all three appeals filed by the assessee, emphasizing that deductions claimed for late deposit of PF/ESI/EPF were permissible as ... Contribution received towards PF/ESIC by the assessee from its employees was not deposited before the due date - HELD THAT:-The issue is no more res-integra. The issue has already been settled in favour of the assessee by various judicial pronouncements by the Tribunal. The Hon’ble Jurisdictional High Court of Delhi in the case of PCIT vs. Pro Interactive Service (India) Pvt. Ltd. [2018 (9) TMI 2009 - DELHI HIGH COURT] We are of the view that the AO was not justified in denying the deduction claimed by the assessee on account of late deposit of PF/ESI/EPF, albeit before filing the return of income. Admittedly in all the above-stated matters, the Revenue had not contended that the assessee has deposited the contribution after the filing of the return of income - Decided in favour of assessee. Issues:Appeals filed against orders passed by appellate authority for A.Y. 2018-19 regarding employee's contribution to ESI and EPF, charging interest u/s 234A, 234B, and 234C, and validity of jurisdiction assumed under section 143(1) of the Income Tax Act, 1961.Employee's Contribution to ESI and EPF:The appeals challenged the additions made on account of delay in depositing employee's contributions towards provident fund and ESI fund. The AR argued that though there was a delay, all contributions were deposited before filing the income tax return, citing relevant case law to support the contention. The DR supported the lower authorities' orders, referring to a specific Delhi Tribunal case and the amendment by Finance Act 2021. The Tribunal noted that the issue had been settled in favor of the assessee by various judicial pronouncements, including a decision by the Hon'ble Jurisdictional High Court of Delhi. The Tribunal held that the legislative intent was not to treat belated payments as deemed income of the employer and that the Finance Act 2021 amendment did not apply to the assessment year in question. As the Revenue did not provide evidence of the cited order being overruled, the Tribunal allowed the appeals, stating that the AO was unjustified in denying the deduction for late deposit of PF/ESI/EPF.Charging of Interest and Jurisdiction Issue:The appeals also contested the charging of interest under sections 234A, 234B, and 234C of the Income Tax Act, 1961, and the validity of the jurisdiction assumed under section 143(1). However, the Tribunal's decision and analysis focused primarily on the issue of employee's contribution to ESI and EPF, as the other grounds were not discussed in detail in the judgment. The Tribunal's ruling in favor of the assessee was based on the established legal principles and precedents cited during the proceedings.Conclusion:The Tribunal allowed all three appeals filed by the assessee, emphasizing that the deductions claimed for late deposit of PF/ESI/EPF were permissible as the contributions were made before filing the income tax return. The judgment highlighted the importance of adhering to legislative intent and relevant case law in tax matters, ultimately ruling in favor of the assessee based on established legal principles and precedents.