2022 (12) TMI 1342 - AT - Income Tax

Tribunal Overturns Disallowance, Rules in Favor of Assessee

Rajhara Engineering Works Sahkari Samiti Maryadit Versus The Assessing Officer, Ward- (2), Bhilai (C.G.)

The Tribunal set aside the disallowance of Rs.19,49,912/- claimed under section 36(1)(va) r.w.s. 43B of the Income Tax Act, 1961, holding that the delayed ... Denying deduction u/s. 36(1)(va) r.w.s. 43B - amount deposited towards employees contribution to provident fund - HELD THAT:- As the facts and the issue involved in the aforesaid order of the Tribunal in the case of Ind Synergy Lyd. [2022 (4) TMI 36 - ITAT RAIPUR] remains the same as are there before us in the case of the present assessee, therefore, we respectfully follow the same. We, thus, in terms of our aforesaid observations set-aside the order of the CIT(Appeals) and direct the AO to vacate the disallowance made by him u/s.36(1)(va) of the Act qua the delayed deposit of the employees share of contribution of EPF - Appeal of the assessee is allowed. Issues Involved:1. Disallowance of deduction claimed under section 36(1)(va) r.w.s. 43B of the Income Tax Act, 1961.2. Confirmation of the order by the Commissioner of Income Tax (Appeals).3. Applicability of amendments to Section 36(1)(va) and Section 43B of the Act by the Finance Act, 2021.Issue 1: Disallowance of Deduction under Section 36(1)(va) r.w.s. 43B:The appeal was against the disallowance of Rs.19,49,912/- claimed under section 36(1)(va) r.w.s. 43B of the Income Tax Act, 1961. The Centralized Processing Center (CPC) disallowed this amount due to delayed deposit of employee's share of PF by the assessee. The assessee contended that the amount was deposited before the due date of filing the return of income, thus challenging the disallowance. The Authorized Representative (AR) for the assessee cited judicial pronouncements to support this argument. The Departmental Representative (DR) argued that the legislative amendments clarified that delayed deposits would not be saved by the extended time period under section 43B(b) of the Act. The Tribunal referred to a previous judgment in a similar case and concluded that the employees' contributions to PF and ESI were covered under section 43B of the Act. The Tribunal set aside the order of the Commissioner of Income Tax (Appeals) and directed the Assessing Officer to vacate the disallowance of Rs.19,49,912/- made under section 36(1)(va) of the Act.Issue 2: Confirmation of the Order by the Commissioner of Income Tax (Appeals):The assessee had previously filed an application under section 154 of the Act, seeking rectification of the adjustment made to its returned income. However, the application was rejected by the Assessing Officer, leading to an appeal before the Commissioner of Income Tax (Appeals). Despite the appeal, the order was confirmed by the Commissioner of Income Tax (Appeals). Subsequently, the assessee appealed before the Tribunal, arguing against the confirmation of the order. The Tribunal, after considering the contentions of both parties and relevant judicial pronouncements, found in favor of the assessee and set aside the order of the Commissioner of Income Tax (Appeals).Issue 3: Applicability of Amendments by the Finance Act, 2021:The Tribunal discussed the applicability of amendments to Section 36(1)(va) and Section 43B of the Act introduced by the Finance Act, 2021. It referred to a case where it was observed that the amendments were applicable prospectively from Assessment Year 2021-22 onwards. The Tribunal concluded that as the amendments were effective from 01.04.2021, they did not impact the present case for Assessment Year 2011-12. Based on this analysis, the Tribunal allowed the appeal of the assessee, setting aside the order of the Commissioner of Income Tax (Appeals) and directing the Assessing Officer to vacate the disallowance made under section 36(1)(va) of the Act. The general grounds of appeal were dismissed as not pressed.This detailed analysis of the judgment covers the issues involved comprehensively, addressing the legal arguments, interpretations of relevant sections, and the Tribunal's final decision based on the facts and legal principles presented.