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January 4, 2023

ITAT removes the addition for the ESI contribution owing to a typo Clearly state the deposit year

by CA Shivam Jaiswal in Income Tax, Legal Court Judgement

ITAT removes the addition for the ESI contribution owing to a typo Clearly state the deposit year

Fact and Issue of the case

Brief facts of the case are that assessee filed its return of income on 25.09.2018 which was processed by Centralized Processing Centre (CPC) Bangalore u/s. 143(1) of the Act by issuing intimation dated 14.11.2019. In the said intimation, disallowance of expenditure indicated in the audited report but not taken into account in computing the total income in the return were noted in respect of two items (i) payment on account of gratuity disallowed u/s. 43B of the Act of Rs.6,75,000/- and (ii) employees’ contribution under ESI Act after due date u/s. 36(1)(va) of the Act of Rs.69,427/-. Aggrieved by the said disallowances assessee went in appeal before the Ld. CIT(A) who confirmed the addition. Aggrieved, the assessee is in appeal before the Tribunal.

Observation of the Tribunal

The Tribunal perused the material available on record and gone through the submissions made by the ld. Counsel. We take note of the fact that assessee has made a contribution of Rs. 1 lakh to LIC Gratuity Fund vide receipt dated 01.10.2018 which is before the due date of filing of return of income on 31.10.2018. On this verified fact, we hold that assessee is eligible for claiming deduction for this amount of Rs. 1 lakh. Accordingly, ground no. 1 taken by the assessee is allowed.

In respect of addition made for delay in depositing of employees’ contribution to ESI, from the perusal of Form 3CD, we note that there is a typographical mistake in writing the year of deposit which has been mentioned as “2018” instead of “2017” as placed at page 22 of the paper book. This fact has been corroborated by the three challans to demonstrate the correct date of deposit of ESI contribution which is made on or before the respective due dates.

Considering the factual matrix along with verifiable documentary evidence, we hold that the addition made of Rs.69,424/- is to be deleted. Accordingly, ground no. 2 of the assessee is allowed.

Conclusion

The tribunal ruled in favour of the assessee

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