2023 (10) TMI 1315 - AT - Income Tax

Tribunal restores PF/ESIC contributions under Section 36(1)(va) and 43B, allows Section 80JJA deduction despite late Form 10DA filing

The ITAT Delhi restored the matter to the Assessing Officer regarding employees' PF/ESIC contributions under Section 36(1)(va) read with Section 43B, ... Employees’ contribution to PF/ESIC u/s 36(1)(va) r.w.s. 43B - default in timely depositing contribution qua the due date - Assessee submitted that mere approval of liability towards payment of salary without actual disbursement would not fastened obligation for deposits of employees’ contribution under the Labour Act - HELD THAT:- We find merit in such alternative plea towards timely deposit of employees’ contribution to PF/ESIC qua the due date prescribed under relevant legislations and regulations. Thus while the action of the Revenue for making adjustments towards belated payment to employees’ contribution is endorsed on first principles, the matter is restored back to the file of the designated Assessing Officer for the purposes of ascertaining whether there is any delay in deposit of such contributions qua the due date in the light of the Kanoi Papers [2001 (5) TMI 139 - ITAT CALCUTTA-E] It shall be open to the assessee to place all factual matrix before the Assessing Officer and take all pleas for evaluation and determination of the issue by the Assessing Officer. The Assessing Officer shall examine this alternative aspect and pass a fresh order in accordance with law after giving proper opportunity to the assessee of being heard. Denial of deduction u/s 80JJA - claim disallowed as prescribed Form 10DA for the purposes of deduction under Section 80JJA has not accompanied the return of income - Assessee submitted claim of deduction was duly made in the original return of income but however same was not reported in the Tax Audit Report and on realizing mistake, the Tax Audit Report was revised and also Form 10DA required for claiming such deduction was also filed albeit after the filing of original return of income but before the date of intimation - HELD THAT:- We find that the Bangalore Bench in Jeans Knit [2022 (3) TMI 244 - ITAT BANGALORE] has taken a view that filing of such prescribed form is directory requirement and hence would stand satisfied if the Accountant’s report is furnished during the course of assessment. In consonance with the view taken by the Co-ordinate Bench, the denial of deduction under Section 80JJA solely for reasons of belated filing of the prescribed form is not justified. Consequently, the action of the CIT(A) is set aside and the Assessing Officer is directed to grant relief by way of deduction as claimed. Ground No.1 is accordingly allowed. Eligibility of deduction u/s 80JJAA - HELD THAT:- On consideration of the counter submissions of the Revenue and assessee on the eligibility of deduction on merits, we consider it expedient to restore the matter back to the file of the CIT(A). It shall be open to the assessee to demonstrate that the criteria for eligibility of deduction under Section 80JJAA has been duly met for the purpose of such claim. CIT(A) shall adjudicate the issue of eligibility of deduction under 80JJAA on merits after giving proper opportunity to the assessee to demonstrate its case. Appeal of the assessee is allowed in part for statistical purposes. Issues:1. Challenge to disallowance of employees' contribution to PF/ESIC under Section 36(1)(va) r.w. Section 43B of the Act.2. Disallowance of Rs. 35,10,013/- under Section 36(1)(va) for Assessment Year 2020-21.3. (i) Disallowance of deduction of Rs. 50,28,534/- under Section 80JJA of the Act. (ii) Disallowance of expenditure of Rs. 98,90,814/- under Section 2(24)(x) r.w. Section 36(1)(va) of the Act.4. Denial of deduction of Rs. 50,28,534/- under Section 80JJA of the Act for Assessment Year 2018-19.Issue 1:The Appellate Tribunal found merit in the plea towards timely deposit of employees' contribution to PF/ESIC as per the due date prescribed under relevant legislations and regulations. The matter was remanded back to the Assessing Officer for fresh determination to ascertain any delay in depositing such contributions. The assessee was directed to provide all relevant facts for evaluation, and the Assessing Officer was instructed to pass a fresh order after due opportunity for the assessee to be heard.Issue 2:Similar contentions were raised for Assessment Year 2020-21 as in the previous appeal. The observations made for Assessment Year 2019-20 were held applicable, setting aside the CIT(A) order and remanding the matter to the Assessing Officer for fresh determination in line with the earlier decision.Issue 3:For the first issue concerning denial of deduction under Section 80JJA due to belated filing of Form 10DA, the Appellate Tribunal held that the denial solely for this reason was not justified. The Assessing Officer was directed to grant the deduction as claimed. As for the second issue on the disallowance of expenditure, the matter was also remanded back to the Assessing Officer for fresh determination following the principles outlined in a previous case.Issue 4:The denial of deduction under Section 80JJA for Assessment Year 2018-19 was contested in the regular assessment proceedings. The Tribunal held that the denial in the regular assessment was not justified, similar to the decision made for the preceding year. The matter was further referred back to the CIT(A) for a thorough examination of the eligibility of the deduction under Section 80JJAA on merits, allowing the assessee to present its case and the CIT(A) to adjudicate accordingly.In conclusion, the appeals of the assessee were allowed for statistical purposes in all the cases, with specific directions given for fresh determinations and assessments in line with the legal principles discussed for each issue.