Income Tax Appellate Tribunal - ChandigarhB.L Educational Society, Solan vs Dcit,Cpc/Ito(Exemption) Ward, Solan on 20 December, 2021आयकर अपील य अ धकरण,च डीगढ़                    यायपीठ, , च डीगढ़\n       I N T H E I NC OM E T A X A P PEL L A TE T RI B U N AL\n          D I V I SI O N B E NC H , " SM C" , CH A N DI G A RH\n\n     BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER\n       & SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER\n\n                     आयकर अपील सं./ ITA No. 313/C H D / 2 0 2 1\n                           नधारण वष / Assessment Year :   2019-20\n       B.L. Educational Society,                  बनाम    The DCIT,\n       The Mall,CPC, Bengaluru,\n       Solan                                              Karnataka\n        थायी लेखा सं./PAN NO: AAAAB0547L\n       अपीलाथ /Appellant                                    यथ /Respondent\n\n                              Hearing though video Conferencing\n\n       नधा रती क ओर से/Assessee by            :      Shri Vishal Mohan, Advocate\n      राज व क ओर से/ Revenue by               :      Smt. Priyanka Dhar, Sr.DR\n\n      सुनवाई क तार%ख/Date of Hearing                 :       08.12.2021\n      उदघोषणा क तार%ख/Date of Pronouncement          :       20.12 .2021\n\n                                        आदे श/Order\n\nPer Sudhanshu Srivastava, Judicial Member:The present appeal has been preferred by the assessee against the\n\norder dated 22.09.2021 of the Commissioner of Income Tax (Appeals),\n\nNational Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to\n\nas 'CIT(A)'] .2.    The assessee in this appeal has taken following grounds of\n\nappeal:-1. That the Ld. CIT(A) is not justified in upholding the addition\n              of Rs. 363670/- madeu/s 36(1)(v)of the Income Tax Act,\n              1961 thought the employees share of PF had been deposited\n              before the due date of filing of the return.ITA No. 313-Chd-2021\n                                                                B.L. Educational Society, Solan22. The order of the CIT(A) is bad in law and facts.3.     The only grievance of the assessee relates to the disallowance of Rs. 3,63,670/-\nmade by the A.O. on account of late payments towards ESI and EPF undersection\n36(1)(va)of the Income Tax Act, 1961 (for short the 'Act'), however, before\nfurnishing the return of income undersection 139(1)of the Act. When the matter was\ntaken to the Ld. CIT(A) the said disallowance was sustained.4.     Now the assessee is in appeal.5.     The contention of the Ld. Counsel for the assessee was that the issue under\nconsideration is squarely covered vide common order dated 20/10/2021 passed by the\nITAT, Chandigarh Bench in ITA Nos.191 & 192/Chd/2021 for the assessment years\n2017-18 & 2018-19 in the case ofRaja Ram Vs. ITO, Yamunanagarand in the case ofSanchi Management Services Private Limited Vs. ITO, Chandigarhin ITA No.\n190/Chd/2021 for the A.Y. 2018-19.6.     In his rival submissions, the Ld. DR strongly supported the orders of the\nauthorities below and reiterated the observations made by the Ld. CIT(A) in the\nimpugned order.7.     We have considered the submissions of both the parties and perused the\nmaterial available on record. In the present cases, it is noticed that an identical issue\nhaving similar facts has already been adjudicated by the ITAT, Chandigarh Bench in\nthe aforesaid referred to cases, wherein one of us is author of the order dated\n20/10/2021.In the said order it has been held vide paras 8 to 10 in ITA\nNos.191&192/Chd/2021 in case ofRaja Ram Vs. ITO, Yamunanagaras under:-8.    I have considered the submissions of both the parties and perused\n       the material available on record.9.     In the present cases, it is noticed that an identical issue having\n       similar facts has already been adjudicated by the ITAT, Jodhpur Bench\n       in the aforesaid referred to case, wherein the undersigned is author of\n       the order dated 28.09.2021 and it has been held vide paras 7 to 10 in\n       ITA in ITA Nos.71 & 72/Jodh/2021 as under:-ITA No. 313-Chd-2021\n                                                   B.L. Educational Society, Solan3"7.      We have considered the submission of both the\nparties and perused the material available on record.8.      In the present cases, it is not in dispute that the\nassessees deposited the contribution of PF & ESI belated in\nterms ofsection 36(1)(va)of the Act, however, the said\ndeposits were made prior to filing of return of incomeu/s\n139(1)of the Act.8.1     Identical issue with the similar facts have already\nbeen adjudicated by the various Benches of the ITAT.8.2     In the case of HarendraNathBiswasvs DCIT Koltaka,ITA No. 186/Kol/2021 for the A.Y. 2019-20, similar issue hasbeen decided vide order dated 16.7.2021 by the ITAT 'B'\nBench, Kolkata. The Relevant findings have been given in\npara 4 of the said order, which read as under;-"4.      We have heard both the parties and perused the\nrecord. First of all we do not countenance this action of the\nLd. CIT(A) for the simple reason that the Explanation 5 was\ninserted by theFinance Act, 2021, with effect from 01.04.2021\nand relevant assessment year before us is AY 2019-20.\nTherefore the lawlaid down bythe Jurisdictional Hon'ble\nHigh Court will apply and since this Explanation-5 has not\nbeen made retrospectively.So we are inclined to follow the\nsame and we reproduce the order of Hon'ble Calcutta High\nCourt in the case ofVijayshree Ltd.supra wherein the\nHon'ble Calcutta High Court has taken note of the Hon'ble\nSupreme Court decision inCIT vs. Alom Extrusion Ltd.reported in 390 ITR 306.The Hon'ble Calcutta High Court's\ndecision inVijayshree Ltd.supra is reproduced as under:"This appeal is at the instance of the Revenue and is directed\nagainst an order dated 28th April, 2011 passed by the Income\nTax Appellate Tribunal, "A" Bench, Kolkata in ITA No.\n1091/Kol/2010 relating to assessment year 2006-07 by which\nthe Tribunal dismissed the appeal preferred by the Revenue\nagainst the order of CIT(A).The only issue involved in this appeal is as to whether the\ndeletion of the addition by the AO on account of Employees\n'Contribution to ESI and PF by invoking the provision of\n                                                             ITA No. 313-Chd-2021\n                                                    B.L. Educational Society, Solan4Section 36(1)(va)read withSection 2(24)(x)of the Act was\ncorrect or not.It appears that the Tribunal below, in view of the decision of\nthe Supreme Court in the case ofCommissioner of Income\nTax vs. Alom Extrusion Ltd., reported in 2009 Vol.390 ITR\n306, held that the deletion was justified.Being dissatisfied, the Revenue has come up with the present\nappeal.After hearing Mr.Sinha, learned advocate, appearing on\nbehalf of the appellant and after going through the decision of\nthe Supreme Court in the case ofCommissioner of Income\nTax vs. Alom Extrusion Ltd., we find that the Supreme Court\nin the aforesaid case has held that the amendment to the\nsecond proviso to the Sec 43(B) of the Income Tax Act, as\nintroduced byFinance Act, 2003, was curative in nature and\nis required to be applied retrospectively with effect from 1st\nApril, 1988.Such being the position, the deletion of the amount paid by the\nEmployees' Contribution beyond due date was deductible by\ninvoking the aforesaid amended provisions ofSection 43(B)of\nthe Act.We, therefore, find that no substantial question of law is\ninvolved in this appeal and consequently, we dismiss this\nappeal.Urgent xerox certified copy of this order, if applied for, be\nsupplied to the parties subject to compliance with all requisite\nformalities."In the light of the aforesaid discussion we do not accept the\nLd. CIT(A)'s stand denying the claim of assessee since\nassessee delayed the employees contribtion of EPF & ESI\nfund and as per the binding decision of the Hon'ble High\nCourt inVijayshree Ltd.(supra) u/s 36(1)(va) of the Act since\nassessee had deposited the employees contribution before\nfiling of Return of Income. Therefore, the assessee succeeds\nand we allow the appeal of the assessee."ITA No. 313-Chd-2021\n                                                    B.L. Educational Society, Solan59.       Similar view has been taken by the ITAT Hyderabad\n'SMC" Bench in ITA No. 644/Hyd./2020 for the AY 2019-20\nin the case ofSalzgitter Hydraulics Private Ltd, Hyderabad vs\nITOvide order dt 15.6.2021. The relevant findings given in\npara 2 of the said order read as under:-"2. Coming to the sole substantive issue of ESI/PF\ndisallowance of Rs.1,09,343/- and Rs.3,52,622/-, the\nassessee's and revenue's stand is that the same has been paid\nbefore the due date of filingsec. 139(1)return and after the\ndue date prescribed in the corresponding statutes;\nrespectively. I notice in this factual backdrop that the\nlegislature has not only incorporated necessary amendments\ninSections 36(va)as well as 43B videFinance Act, 2021to\nthis effect but also the CBDT has issued Memorandum of\nExplanation that the same applies w.e.f. 1.4.2021 only. It is\nfurther not an issue that the forergoing legislative\namendments have proposed employers contributions;\ndisallowancesu/s 43Bas against employeeu/s 36 (va)of the\nAct; respectively. However, keeping in mind the fact that the\nsame has been clarified to be applicable only with prospective\neffect from 1.4.2021, I hold that the impugned disallowance is\nnot sustainable in view of all these latest developments even if\nthe Revenue's case is supported by the following case law.(i)     CIT vs. Merchem Ltd, [2015] 378 ITR 443(Ker)(ii)    CIT vs. Gujarat State Road Transport Corporation(2014) 366 ITR 170 (Guj.)(iii)    CIT vs. South India Corporation Ltd.(2000) 242\n        ITR 114 (Ker)(iv)     CIT vs. GTN Textiles Ltd.(2004) 269 ITR 282 (Ker)(v)      CIT vs. Jairam& Sons[2004] 269 ITR 285 (Ker)\nThe impugned ESI/PF disallowance is directed to be deleted\ntherefore."10.      On an identical issue, this Bench of the Tribunal vide\norder dated 12.8.2021 in the case ofMohangarh Engineers\nand Construction Company, Jodhpur & Others vsCPC,\nBanglorein ITA No. 5/Jodh/2021 and others held vide para\n13 to 18 as under:-ITA No. 313-Chd-2021\n                                                    B.L. Educational Society, Solan6"13.     We have heard the rival contentions and perused the\nmaterial available on record. On perusal of the details\nsubmitted by the assessee as part of its return of income, it is\nnoted that the assessee has deposited the employees's\ncontribution towards ESI and PF well before the due date of\nfiling of return of incomeu/s 139(1)and the last of such\ndeposits were made on 16.04.2019 whereas due date of filing\nthe return for the impugned assessment year 2019-20 was\n31.10.2019 and the return of income was also filed on the said\ndate.     Admittedly and undisputedly,        the employees's\ncontribution to ESI and PF which have been collected by the\nassessee from its employees have thus been deposited well\nbefore the due date of filing of return of incomeu/s 139(1)of\nthe Act.14.      The issue is no more res integra in light of series of\ndecisions rendered by the Hon'ble Rajasthan High Court\nstarting fromCIT vs. State Bank of Bikaner & Jaipur(supra)\nand subsequent decisions.15.In this regard, we may refer to the initial decision of\nHon'ble Rajasthan High Court in case ofCIT vs. State Bank\nof Bikaner & Jaipurwherein the Hon'ble High Court after\nextensively examining the matter and considering the various\ndecisions of the Hon'ble Supreme Court and various other\nHigh Courts has decided the matter in favour of the assessee.\nInthe said decision, the Hon'ble High Court was pleased to\nheld as under:"20. On perusal ofSec.36(1)(va)andSec.43(B)(b)and\nanalyzing the judgments rendered, in our view as well, it is\nclear that the legislature brought in the statuteSection\n43(B)(b)to curb the activities of such tax payers who did not\ndischarge their statutory liability of payment of dues, as\naforesaid; and rightly so as on the one hand claim was being\nmade underSection 36for allowing the deduction of GPF,\nCPF, ESI etc. as per the system followed by the assessees in\nclaiming the deduction i.e. accrual basis and the same was\nbeing allowed, as the liability did exist but the said amount\nthough claimed as a deduction was not being deposited even\nafter lapse of several years. Therefore, to put a check on the\nsaid claims/deductions having been made, the said provision\n                                                             ITA No. 313-Chd-2021\n                                                    B.L. Educational Society, Solan7was brought in to curb the said activities and which was\napproved by the Hon'ble Apex Court in the case ofAllied\nMotors (P) Ltd.(supra).21. A conjoint reading of the proviso toSection 43-Bwhich\nwas inserted by the Finance Act, 1987 made effective from\n01/04/1988, the words numbered as clause (a), (c), (d), (e)\nand (f), are omitted from the above proviso and, further more\nsecond proviso was removed byFinance Act, 2003therefore,\nthe deduction towards the employer's contribution, if paid,\nprior to due date of filing of return can be claimed by the\nassessee. In our view, the explanation appended toSection\n36(1)(va)of the Act further envisage that the amount actually\npaid by the assessee on or before the due date admissible at\nthe time of submitting return of the income underSection 139of the Act in respect of the previous year can be claimed by\nthe assessee for deduction out of their gross total income. It is\nalso clear thatSec.43Bstarts with a notwithstanding clause &\nwould thus overrideSec.36(1) (va)and if read in isolationSec. 43Bwould become obsolete. Accordingly, contention of\ncounsel for the revenue is not tenable for the reason aforesaid\nthat deductions out of the gross income for payment of tax at\nthe time of submission of return underSection 139is\npermissible only if the statutory liability of payment of PF or\nother contribution referred to in Clause (b) are paid within\nthe due date under the respective enactments by the assessees\nand not under the due date of filing of return.22. We have already observed that till this provision was\nbrought in as the due amounts on one pretext or the other\nwere not being deposited by the assessees though substantial\nbenefits had been obtained by them in the shape of the amount\nhaving been claimed as a deduction but the said amounts\nwere not deposited. It is pertinent to note that the respective\nAct such as PF etc. also provides that the amounts can be\npaid later on subject to payment of interest and other\nconsequences and to get benefit under theIncome Tax Act, an\nassessee ought to have actually deposited the entire amount\nas also to adduce evidence regarding such deposit on or\nbefore the return of income under sub-section (1) ofSection\n139of the IT Act.ITA No. 313-Chd-2021\n                                                    B.L. Educational Society, Solan823. Thus, we are of the view that where the PF and/or EPF,\nCPF, GPF etc., if paid after the due date under respective Act\nbut before filing of the return of income underSection 139(1),\ncannot be disallowed underSection 43Bor underSection\n36(1)(va)of the IT Act."16.     The said decision has subsequently been followed inCIT vs. Jaipur Vidyut Vitran Nigam Ltd.(supra), CIT vs.\nUdaipur Dugdh Utpadak Sahakari Sangh Ltd.(supra), and\nCIT vs Rajasthan State Beverages Corportation Limited(supra). In all these decisions, it has been consistently held\nthat where the PF and ESI dues are paid after the due date\nunder the respective statues but before filing of the return of\nincome undersection 139(1), the same cannot be disallowed\nundersection 43Bread withsection 36(1)(va)of the Act.17.      We further note that though the ld. CIT(A) has not\ndisputed the various decisions of Hon'ble Rajasthan High\nCourt but has decided to follow the decisions rendered by the\nHon'ble Delhi, Madras, Gujarat and Kerala High Courts.\nGiven the divergent views taken by the various High Courts\nand in the instant case, the fact that the jurisdiction over the\nAssessing officer lies with the Hon'ble Rajasthan High Court,\nin our considered view, the ld CIT(A) ought to have\nconsidered and followed the decision of the jurisdictional\nRajasthan High Court, as evident from series of decisions\nreferred supra, as the same is binding on all the appellate\nauthorities as well as the Assessing officer under its\njurisdiction in the State of Rajasthan.18.      In light of aforesaid discussion and in the entirety of\nfacts and circumstances of the case, the addition by way of\nadjustment while processing the return of incomeu/s 143(1)amounting to Rs 4,38,530/- so made bythe CPCtowards the\ndelayed deposit of the employees's contribution towards ESI\nand PF though paid well before the due date of filing of\nreturn of incomeu/s 139(1)of the Act is hereby directed to be\ndeleted as the same cannot be disallowed undersection 43Bread withsection 36(1)(va)of the Act in view of the binding\ndecisions of the Hon'ble Rajasthan High Court. "11.      Since the facts of the present cases are identical to\nthe facts involved in the aforesaid referred to cases, therefore\n                                                                                ITA No. 313-Chd-2021\n                                                                       B.L. Educational Society, Solan9respectfully following the earlier orders as referred to herein\n                above of the different Benches of the ITAT, the impugned\n                additions made by the Assessing Officer and sustained by the\n                Ld. CIT(A) on account of deposits of employees contribution\n                of ESI & PF prior to filing of the return of incomeu/s 139(1)of the Act, in both the years under consideration prior to the\n                amendment made by theFinance Act, 2021w.e.f. 1.4.2021\n                vide Explanation 5, are deleted.12.     In the result, both the appeals of the assessees are\n                allowed."10.   So respectfully following the aforesaid referred to order of the\n       Coordinate Bench of the Tribunal, the disallowances sustained by the\n       Ld. CIT(A) are deleted.8.     Since the facts involved in the present case are identical to the facts involved in\nthe case ofRaja Ram Vs. ITO, Yamunanagar(supra). So respectfully following the\naforesaid referred to order of the Coordinate Bench of the Tribunal, the disallowances\nsustained by the Ld. CIT(A) are deleted.In the result, the appeal of the assesse is allowed.Order pronounced in the Open Court on 20.12.2021.Sd/-                                                               Sd/-\n( VIKRAM SINGH YADAV)                                    (SUDHANSHU SRIVASTAVA)\n   Accountant Member                                            Judicial Member\nDated : 20.12.2021\n"आर.के."\n           आदे शक      त,ल-पअ.े-षत/ Copy of the order forwarded to :\n           1. अपीलाथ / The Appellant\n           2.      यथ / The Respondent\n           3. आयकरआयु/त/ CIT\n           4. आयकरआय/\n                    ु त (अपील)/ The CIT(A)5. -वभागीय त न2ध, आयकरअपील%यआ2धकरण, च4डीगढ़/ DR, ITAT, CHANDIGARH6. गाडफाईल/ Guard File\n\n                                                              आदे शानस\n                                                                     ु ार/ By order,\n                                                       सहायकपंजीकार/ Assistant Registrar