Income Tax Appellate Tribunal - Ahmedabad
Asstt. Cit vs Rotex Mfg. & Engg. (Guj) (P) Ltd. on 18 August, 2003
Equivalent citations: (2004)90TTJ(AHD)171
ORDER
D.T. Garasia, J.M.:
This appeal by the revenue is directed against the order of the Commissioner (Appeals)-III, Baroda, for assessment year 1994-95. The grounds of the appeal read as under .-
"On the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) erred in-
(i) in deleting the disallowance of Rs. 76,576 made on account of late payment of ESI and PF.
(ii) in deleting the disallowance of interest of Rs. 13,131 on deposits held as unexplained by the assessing officer. "
2. The short facts of the case are that the assessee- company is engaged in the manufacturing of solenoid valves used for textile industries. The assessee has filed the details of expenditure. On scrutiny of the details towards payment of PF, ESIC, etc., the assessing officer found that these amounts are paid late by the prescribed date for the months of December, 1993 to March, 1994, in respect of PF and for the months of May-June, 1993, August, 1993 and December, 1993 to March, 1994, in respect of ESIC. The assessing officer disallowed an amount of Rs. 76,576 under the provisions of section 36(1)(va) of the Act.
3. The matter was carried in appeal before the Commissioner (Appeals) and Commissioner (Appeals) has deleted the addition by observing as under :
"The first ground of appeal of the appellant is against the disallowance of Rs. 76,576 on account of ESI and PF payments. The facts of the case are that the appellant paid these amounts late for the months of December, 1993 to March, 1994, and for the months of May, June, 1993, August, 1993, etc. In view of these facts, the assessing officer disallowed a sum of Rs. 76,576 under section 36(1)(va) of the Income Tax Act. During the course of appeal, it was argued that there was no delay in depositing the PF and ESI. In this connection, a copy of the challan for ESI and PF payments along with complete copy of account was submitted. It was argued that there was a slight delay in some of the cases of payments and, therefore, for this reason no disallowance should have been made. It was further argued that in the case of Fluid Air (India) v. Dy. CIT (1997) 63 ITD 182 (Bom), it was held that if the payment of ESI and PF was made within 9 to 20 days after the payment of salary and wages, then it should be deemed that the payment has been made within the due (date). It was, therefore, argued that the disallowance made be deleted. The arguments of the appellant are correct. The maximum delay in making the payment is only 20 days. Such a delay is hardly any delay and, therefore, the disallowance is deleted."
4. We have heard the rival submissions of both the parties. During the course of proceedings, the assessee has submitted the chart which reads as under
PF Month Employee's contribution (Rs.) Employer's contribution (Rs.) Dec., 1993 7,767 8,573 Jan., 1994 7,554 8,330 Feb., 1994 7,397 8,148 March, 1994
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8,470 22,718 33,521 ESIC Month Employee's contribution (Rs.) Employer's contribution (Rs.) May, 1993 823.10 2,238 June, 1993 808.00 2,169 Aug., 1993 631.00 1,676 Dec., 1993 705.00 1,880 Jan., 1994 719.00 1,915 Feb., 1994 691.00 1,840 March, 1994
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2,324 4,377.10 14,042 It appears from the above chart that the assessee has made payment within the grace period of 5 days and as per CPDC's Circular No. E-128(I) 60-III, dated 19-3-1964 as modified by Circular No. E 11/128 (Sec. 14B Amendment/73, dated 24-10-1973), which allows five days of grace period to the employers for payment of provident fund contribution, administrative charges and inspection charges, and this view is also confirmed by the decision in CIT v. Shri Ganapathy Mills Co. (P) Ltd. (2000) 243 ITR 879 (Mad). Irs respect of contribution to ESI, the due date is 21st of each succeeding month. Here, in the instant case, the assessee has made the payment before 21st of each succeeding month. Therefore, we are of the view that the Commissioner (Appeals) is justified in deleting the addition and our interference is not required with the order of the Commissioner (Appeals).
5. In the result, the appeal of the revenue is dismissed.