TaxTMI 
TaxTMI 
2022 (5) TMI 271
X X X X Extracts X X X X
X X X X Extracts X X X X
....ribution towards PF/ESI payment of Rs.39,81,357/- by invoking the provisions of Section 36(1)(va) of the Act. The disallowance so made being contrary to the provisions of law and facts of the case. Hence, the same kindly be deleted in full. 4. The Ground No. 1 of the assessee is general in nature which does not require any adjudication. 5.1 The main issue arises in this appeal of the assessee is regarding disallowance of employee's contribution of PF and ESI deposited belatedly but before due date of filing of return of income U/s 139(1) of the Income Tax Act, 1961 (in short, the Act). 5.2 The assessee filed its return of income on 15.10.2019 which was processed u/s 143(1) of the Act whereby an adjustment was made on account of disallowance of claim of deduction with respect to employees' contribution towards PF and ESIC deposited belatedly. During the course of assessment proceedings, the CPC, Bangalore confirmed the disallowance of Rs.39,81,357/- on account of late deposit of employees contribution towards PF/ESI. The assessee challenged the said adjustment before the ld. CIT(A)/NFAC and contended that as per the binding precedents if the payment is made in the government acc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....yees contribution to PF/ESI has been paid late under that Act. Based on the reasoning above, the addition made by the CPC deserves to be upheld. Therefore, the addition made of Rs. 39,81,357/- is confirmed and the grounds raised in this regard are dismissed. 4. In the result, the appeal is treated as dismissed.'' 5.5 During the course of hearing, the ld. AR of the assessee prayed that ld, CIT(A) has erred in confirming the addition of Rs.39,81,357/- on account of late payment of employees PF and ESI Contribution for which the ld. AR of the assessee relied on following case laws:- '' Covered Issue: In the case of Kamal Kishore Sarda ITA. No. 224/JP/2021 dated 28.02.2022, the bench has allowed the appeal following the judgements of Mohangarh Engineers and Construction company vs DCIT, CPC ITA No. 405/JODH/2021 dated 12.08.2021 and Shri Gopalkrishna Aswini Kumar vs. ACIT (in ITA No. 359/Bang/2021 dated 12.10.2021) Similarly, in M/s K.S. Automobiles Pvt. Ltd. vs ITO in ITA No. 1184- JP-2018 vide order dated 18-03-2019, the Hon'ble Tribunal held as under: "Thus, it is clear that the Hon'ble jurisdictional High Court has followed the earlier decisions in case of PCIT....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lso contended that regarding second issue with regard to ESI and PF, however, the same is covered by the decision of this Court in the case of CIT vs. State Bank of Bikaner & Jaipur D.B. IT Appeal No. 177 of 2011 decided on 6th Jan., 2014, wherein it has been held as under "Thus, we are of the view that where the PF and-or EPF, CPF, GPF etc., if paid after the due date under respective Act but before filing of the return of income under s. 139(1), cannot be disallowed under s. 43B or under s. 36(1)(va) of the IT Act. " 2.4 It is submitted that the issue is now no more res-integra in as much as the Hon'ble Rajasthan High Court has already taken a view that employer and employees contributions both, if paid before the due date u-s 139 no disallowance can be made u-s 36(1)(v)(a) r-w s. 2(24)(x) and s. 43B. In the case of CIT vs. SBBJ (2014) 363 ITR 70 (Raj), it was held that: "Where PF and-or EPF, CPF, GPF etc., if paid after due date under respective Act but before filing of return of income u-s. 139(1), could not be disallowed u-s. 43B or u-s. 36(1)(va). Substantial question of law answered against revenue and in favour of assessee. Revenue's appeal dismissed." 2.5 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mount has been deposited on or before the due date of filing the return under s. 139 and admittedly it was deposited on or before the due date then the amount cannot be disallowed under s. 43B of the IT Act or under s. 36(1)(va) of the Act. In fact, in the above matters one of the parties is same as in the present appeals, therefore, the issue is no more res Integra in the light of judgments of this Court, referred to supra and, in our view, no substantial question of law arises out of the impugned orders of the Tribunal, which may require attention of this Court." Similarly in the case of CIT vs. SBBJ (2014) 99 DTR (Raj) 131: (2014) 265 CTR (Raj) 471 : (2014) 363 ITR 70 (Raj), the Hon'ble Jurisdictional High Court has held as under : "21. A conjoint reading of the proviso to s. 43B which was inserted by the Finance Act, 1987 made effective from 1st April, 1988, the words numbered as cls. (a), (c), (d), (e) and (f), are omitted from the above proviso and, furthermore second proviso was removed by Finance Act, 2003, therefore, the deduction towards the employer's contribution, if paid, prior to due date of filing of return can be claimed by the assessee. In our view, t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mployees' contribution made on account of provident fund, ESI and pension fund on account of delay in payment of the employees' contribution was not sustainable." 4. Alternatively, it is settled law that if decisions of non-Jurisdictional High courts are in conflict with each other than decision favourable to assessee must be followed. Kindly refer CIT v. Vegetable Products Ltd. [1972] 88 ITR 192 (SC) Hon'ble Supreme Court has laid down a principle that "if two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted. This principle has been consistently followed by the various authorities as also by the Hon'ble Supreme Court itself. Thus the ld. AR of the assssee prayed that in view of the above settled legal position, the disallowance so made kindly be deleted. 5.6 On the other hand, the ld. DR supported the orders of the lower authorities. 5.7 We have heard both the parties and perused the materials available on record. The Bench noted during the course of hearing that the AO made an addition of Rs.39,81,357/- on account of late deposit of employees PF & ESI by the assessee. However, the asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... contribution towards ESI and PF well before the due date of filing of return of income u/s 139(1) and the last of such deposits were made on 16.04.2019 whereas due date of filing the return for the impugned assessment year 2019-20 was 31.10.2019 and the return of income was also filed on the said date. Admittedly and undisputedly, the employees's contribution to ESI and PF which have been collected by the assessee from its employees have thus been deposited well before the due date of filing of return of income u/s 139(1) of the Act. 14. The issue is no more res integra in light of series of decisions rendered by the Hon'ble Rajasthan High Court starting from CIT vs. State Bank of Bikaner & Jaipur (supra) and subsequent decisions. 15. In this regard, we may refer to the initial decision of Hon'ble Rajasthan High Court in case of CIT vs. State Bank of Bikaner & Jaipur wherein the Hon'ble High Court after extensively examining the matter and considering the various decisions of the Hon'ble Supreme Court and various other High Courts has decided the matter in favour of the assessee. In the said decision, the Hon'ble High Court was pleased to held as under: "20. On perusal of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t or the other were not being deposited by the assessees though substantial benefits had been obtained by them in the shape of the amount having been claimed as a deduction but the said amounts were not deposited. It is pertinent to note that the respective Act such as PF etc. also provides that the amounts can be paid later on subject to payment of interest and other consequences and to get benefit under the Income Tax Act, an assessee ought to have actually deposited the entire amount as also to adduce evidence regarding such deposit on or before the return of income under sub-section (1) of Section 139 of the IT Act. 23. Thus, we are of the view that where the PF and/or EPF, CPF, GPF etc., if paid after the due date under respective Act but before filing of the return of income under Section 139(1), cannot be disallowed under Section 43B or under Section 36(1)(va) of the IT Act." 16. The said decision has subsequently been followed in CIT vs. Jaipur Vidyut Vitran Nigam Ltd. (supra), CIT vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. (supra), and CIT vs Rajasthan State Beverages Corporation Limited (supra). In all these decisions, it has been consistently held that where the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nstant case. Similar view has been taken by the Coordinate Bangalore Benches in case of Shri Gopalkrishna Aswini Kumar vs. ACIT (supra) wherein it has held as under:- "7. The Hon'ble Karnataka High Court in the case of Essae Teraoka Pvt. Ltd., (supra) has taken the view that employee's contribution under section 36(1)(va) of the Act would also be covered under section 43B of the Act and therefore if the share of the employee's share of contribution is made on or before due date for furnishing the return of income under section 139(1) of the Act, then the assessee would be entitled to claim deduction. Therefore, the issue is covered by the decision of the Hon'ble Karnataka High Court. The next aspect to be considered is whether the amendment to the provisions to section 43B and 36(1)(va) of the Act by the Finance Act, 2021, has to be construed as retrospective and applicable for the period prior to 01.04.2021 also. On this aspect, we find that the explanatory memorandum to the Finance Act, 2021 proposing amendment in section 36(1)(va) as well as section 43B is applicable only from 01.04.2021. These provisions impose a liability on an assessee and therefore cannot ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....led for when the amounts are deposited before filing the return of income. Similar view has also been taken by the Hon'ble Punjab & Haryana High Court in the case of CIT vs. Hemla Embroidery Mills (P) Ltd (supra) and Indian Geotechnical Services (supra). As far as the applicability of amendment made by Finance Act 2021 is concerned, I find that the Co-ordinate Bench of Tribunal in the case of Indian Geotechnical Services (supra) has held that amendment made by Finance Bill 2021 shall take effect from 1st April 2021 and will accordingly apply to A.Y. 2021-11 and subsequent years. In the present case assessment year involved is 2018-19 and therefore following the aforesaid decision in thecase of Indian Geotechnical Services (supra), I am of the view that the amended provisions would have no application to the case under consideration. Before me, Learned DR has relied on the decision of Co-ordinate Bench of Tribunal in the case of Vedvan Consultants Pvt. Ltd. (supra). It is settled law that when two judgments are available giving different views then the judgment which is in favour of the assessee shall apply as held in case of Vegetable Products Ltd. 82 ITR 192 by the Hon'ble Supreme....