TaxTMI 
TaxTMI 
TaxTMI 
2019 (11) TMI 1186
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....dated 30.12.2016 has passed Appellate orders confirming and upholding the Addition made by the Assessing Officer for the Assessment Year 2013-14 representing the claim of Deduction of P.F. and E.S.I. contribution of Employees amounting to Rs. 33,32,061/-. It is claimed in this Appeal that the above cited order of the learned C.I.T. (Appeals) is erroneous and is not in accordance with the provisions of law aid the same is contrary to the judicial decisions rendered on the issue. 2. The learned C.I.T.(Appeals) is not justified in concluding that the P.F. and E.S.I. contributions of the Employees if they are not paid within the due dates specified under the respective statutes cannot be allowed as a deduction. 3. The stand taken by the learned C.I.T.(Appeals) that the provisions of Section 43B cannot be applied to the contributions of Employees towards P.F. and E.S.I. that they are only covered under Sec.36 (1)(va) and explanation appearing on this. 4. While many judicial decisions have rendered favourable verdict on the issue, the learned C.I.T.(Appeals) is not justified in relying on the unfavourable decision rendered by the Gujarath High Court in the case of C.I.T. Vs Gujarat....
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....on if remitted within the due dates prescribed under Sec. 139 (1) shall be eligible for deduction. Hence there is no justification in holding that Section 43B does not deal with allowability of Employees contribution. 11. The learned C.l.T.(Appeals) ought to have followed the binding decision of the Madras High Court in the case of Commissioner of Incometax Vs M/s Industrial Security and Intelligence India Pvt. Ltd. (Tax Case Appeal No. 585 and 586 of 2015 dated 24.07.2015) wherein the Honorable High Court has clearly concluded that the Employees contribution to P.F. and E.S.I. paid within the due dates for filing the Return prescribed under Sec.139 (1), can be allowed as a deduction following the verdict of Supreme Court and also the decision of the Delhi High Court in the case of C.l.T. Vs AIMIL Ltd. (321 ITR 508). 12. For these or any other grounds that may be raised at the time of hearing of appeal, it is prayed that the Honorable Tribunal may be pleased to pass orders deleting the Addition made amounting to Rs. 33,32,061/- representing the claim of Deduction of P.F. and E.S.I, contribution of employees and pass orders dismissing the Appellate order of the C.l.T. (Appeals) ....
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.... taxmann.com 119 (Kerala) , to hold that employee contribution towards PF and ESI which was deducted by assessee from salaries of the employees and which stood deposited beyond the due date prescribed for deposit of PF and ESI as provided under relevant statute governing PF and ESI shall be deemed to be income of the assessee keeping in view provisions of Section 36(1)(va) read with Section 2(24)(x) of the 1961 Act. The AO also referred to CBDT Circular No.22/2015 in F.No.279/Misc./140/2015-ITJ dated 17.12.2015 for making additions to the income of the assessee for belated deposit of employee contribution of PF and ESI, vide assessment order dated 21.03.2016 passed by AO u/s 143(3) of the 1961 Act 4 Aggrieved by an assessment framed by AO u/s 143(3) of the 1961 Act vide assessment order dated 21.03.2016 , the assessee filed first appeal with learned CIT(A) which stood dismissed by learned CIT(A) vide appellate order dated 30.12.2016, by following aforesaid decisions of Hon'ble Gujarat High Court in the case of CIT v. Gujarat State Road Transport Corporation (supra) and also decision of Hon'ble Kerala High Court in the case of CIT v. Merchem Ltd. (supra) as well aforesaid CBDT circ....
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....Section 148 of the Income Tax Act. While completing the re-assessment, the Assessing Officer disallowed the expenses claimed by way of Employee's contribution to PF and ESI holding that the assessee had not paid the employee's contribution of PF and ESI within the due dates specified under the respective Act. Aggrieved by the said order of assessment, the assessee preferred appeals before the Commissioner of Income Tax (Appeals) challenging the reopening as well as the disallowance. The Commissioner of Income Tax (Appeals) sustained the order of the assessment, thereby dismissed the appeals. Aggrieved by the same, the assessee preferred further appeals before the Tribunal. The Tribunal relied upon the decision of the Supreme Court in the case of CIT V. Alom Extrusions Ltd. reported in 319 ITR 306, decision of the Delhi High Court in the case of CIT V. Amil Ltd. reported in 321 ITR 508 and that of the Co-ordinate Bench of the Tribunal in the case of M/s.Venkateswara Electrical Industries P. Ltd. V. DCIT in ITA Nos.1344, 1345 and 1636/Mds/2014 dated 28.8.2014 held as follows: "5. Heard both sides. Perused orders of lower authorities and the decisions relied on before us. It....
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....hat the assessee is entitled to claim expenditure on employee's contribution towards ESI and Provident Fund for both the AYs. Accordingly, both the appeals of the assessee are allowed." 6. Respectfully following the above, decision, we direct the Assessing Officer to delete disallowances made under section 43B of the Act for both these assessment years. The grounds of appeal raised by the assessee are allowed." 3. Aggrieved by the said order of the Tribunal, the Revenue is before this Court. 4. Heard learned Standing Counsel appearing for the Revenue and perused the materials placed before this Court. 5. We find that the Tribunal has rightly relied on the decision of the Supreme Court in the case of CIT V. Alom Extrusions Ltd. reported in 319 ITR 306, 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. Amil Ltd. reported in 321 ITR 508 held that if the assessee had deposited employee's contribution towards Provid....
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....to refer to Circular NO.22/2015 dated 17.12.2015 in F.No. 279/Misc./140/ 2015-ITJ. It has been clarified therein, that the Apex Court decision in the case of CIT v. Alom Extrusions Ltd. 185 Taxman 416 has been accepted with regard to the employer's contribution to the PF Fund or Superannuation Fund or Gratuity Fund if deposited on or before the due date. No disallowance could be made u/s 438 of the Act. It has also been contribution to Welfare Funds governed by s.36(1)(va). However, in view of the jurisdictional High Court's decision dated 24.7.2015 in the case of CIT v. Industrial Security and Intelligence India (P.) Ltd. in TC (A) NO.585 & 586 of 2015 and MP No.1 of 2015, it has been held therein placing reliance on the Delhi High Court's decision in the case of Aimil Ltd. 321 ITR 508, that if the assessee had deposited employees contribution towards PF and ESI after the due date as prescribed under the relevant Act, but before the due date of filing of the return under the Income Tax Act, no disallowance could be made in view of the provisions u/s.43B as amended by Finance Act 2003. Respectfully following the ratio laid down by the Hon'ble High Court, the plea of....