TaxTMI 
TaxTMI 
2022 (2) TMI 872
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....al, bad in law and the violation of rudimentary principle of contemporary jurisprudence. 5. That the appellant craves leave to add, amend, alter, vary and/or withdraw any or all the above grounds of appeal before or at the time of hearing of the appeal." 3. Facts of the case, in brief, are that the assessee is a company and filed its return of income on 27th October, 2018 declaring the total income at Rs. 17,22,282/-. The return was processed u/s 143(1) of the IT Act making an addition/adjustment of Rs. 23,55,432/- on account of late deposit of employees' contribution to ESI and PF u/s 36(1)(va) of the IT Act. The assessee filed a rectification application with the CPC on 3rd December, 2019 for the deletion of addition made u/s 143(1) of Rs. 23,55,432/- in respect of late deposit of employees' contribution of PF and ESI as reported in the tax audit report. However, the CPC rejected the rectification application. 3.1 The assessee preferred an appeal before the CIT(A) and the ld.CIT(A) dismissed the appeal filed by the assessee by observing as under:- "4. Decision:- From the details filed, it is noted that deposits of employees' contribution towards PF and....
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.... that amount shall never be allowed as deduction under section 36(l)(va) even though it might have been deposited with a delay of just 1 day. There is no provision in the Act under which this amount can be allowed as deduction in any year thereafter. 4.1.2 The judicial decision:- In this context, the Jurisdictional High Court of Delhi in CIT vs. Bharat Hotels Limited (2019) 410 ITR 417 (Del.) had an occasion to examine the matter. The Hon'ble Court has made the following observations:- "Having regard to the specific provisions of the Employees' Provident Funds Act and ESI Act as well as the concerned notifications which granted a grace period of 5 days, we are of the opinion that the ITAT's decision in this case was not correct. The assessee undoubtedly was entitled to claim the benefit and properly treat such amounts as having been duly deposited, which were in fact deposited within the period prescribed (ie. 15+5 days in the case of EPF and 21 days + any other grace period in terms of the extent notification). As far as the amounts constituting deductions from employees' salaries towards their contributions, which were made beyond such stipulated period....
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.... on behalf of the assessee. The only issue to be decided in the impugned appeal is regarding the allowability of late payment of employees' contribution to PF and ESI after the due date prescribed under the respective Acts, but, paid on or before the due date of filing of the income-tax return/s 139(1) of the IT Act. I find, identical issue had come up before the Tribunal in the case of M/s Adama Solution P. Ltd. vs. ADIT, vide ITA No.1800/Del/2020, order dated 13.10.2021 where the Tribunal has held as under:- "7. I have considered the rival arguments made by both the sides, perused the orders of the A.O. and the Ld. CIT(A) and the paper book filed on behalf of the assessee. I have also considered the various decisions cited before me. I find the Asst. Director of Income Tax, CPC, Bangalore in the instant case has adjusted the income of the assessee by Rs. 8,37,850/- making addition of Rs. 8,37,850/- on account of belated payment to employees' contribution towards PF & ESI by invoking the provisions of Section 143(1)(a)(iv) of the I.T. Act, 1961. I find the rectification application filed by the assessee under section 154 was dismissed by the DCIT, CPC and on further a....
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....ted before the due date of filing of return of income. Therefore, the ld AO as well as the ld CIT(A) disallowed the same holding that such contribution becomes the income of the assessee under the provision of section 2(24)(x) of the Act and thereafter if the same is deposit within the due date prescribed under the respective laws then same is allowable as deduction u/s 36(1)(va) of the Act. Coordinate bench in case of DCIT Vs Dee Development Engineers in ITA No. 4959/DEL/2016 ( A.Y 2011-12) has held as Under:- "7. We have heard both the parties and perused all the relevant material available on record. As regards Ground No. 1, the assessee company has not deposited the employees' contribution within the due date which is prescribed under the said statute i.e. Provident Fund and ESIC. This issue is dealt by the Hon'ble Delhi High Court in case of CIT vs. M/s Bharat Hotels Ltd. 410 ITR 417 wherein the issue is decided in favour of the revenue, without considering the decision of the Hon'ble Delhi High Court in case of CIT vs. AIMIL Ltd.(2010) 321 ITR 508 (Del.). But the Ld. AR relied upon the decision of the Hon'ble Delhi High Court in case of Pr. CIT vs. Pr....
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....is proposed to insert Explanation 2 to clause (va) of sub-section (1) of the said section so as to clarify that the provisions of section 43B shall not apply and shall be deemed never to have been applied for the purposes of determining the "due date" under the said clause. This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021- 2022 and subsequent assessment years." Therefore it is apparent that the above amendment do not apply to the assessment year 2014-15 in this appeal. 8. In view of this we allow the solitary ground of appeal raised by the assessee holding that the addition/disallowance made by the learned assessing officer of late deposit of employees contribution to the provident fund and ESI, as it is deposited before the due date of the filing of the return of an income but beyond the due date prescribed Under the respective provident fund and ESI laws is not sustainable in law. 9. In the result, appeal of the assessee is allowed." 7.3. Since in the instant case the assessee admittedly has deposited the employees' contribution to PF & ESI before the due date of filin....