MANU/IL/0413/2021

IN THE ITAT, BANGALORE BENCH, BANGALORE

ITA No. 60/Bang/2021

Assessment Year: 2018-2019

Decided On: 14.10.2021

Appellants: Focus Consultancy Services
Vs.
Respondent: Asst. Director of Income Tax (CPC)

Hon'ble Judges/Coram:
B.R. Baskaran, Member (A) and Beena Pillai

ORDER

B.R. Baskaran, Member (A)

1. The assessee has filed this appeal challenging the order dated 02.3.2021 passed by Ld. CIT(A), National Faceless Appeal Centre and it relates to the assessment year 2018-19. The assessee is aggrieved by the decision of Ld. CIT(A) in confirming the disallowance of Rs. 35.06 lakhs made u/s. 36(i)(va) of the Income-tax Act, 1961 ['the Act' for short] relating to employees contribution to PF while processing return u/s. 143(1) of the Act.

2. The facts relating to the above said issue are stated in brief. During the year under consideration, the assessee remitted employees contribution of ESI amounting to Rs. 35,06,231/- beyond the due date prescribed under the ESI Act. However, it was paid before the due date for filing return of income u/s. 139(1) of the Act. Hence, the assessee did not make any disallowance u/s. 36(1)(va) of the Act. While processing return of income filed by the assessee, the CPC disallowed the above said amount. Aggrieved, the assessee filed the appeal before the Ld. CIT(A).

3. Before Ld. CIT(A), the assessee placed reliance on the decision rendered by Hon'ble Karnataka High Court in the case of CIT Vs. Spectrum Consultants India Pvt. Ltd. MANU/KA/3709/2013 : (2014) 2 TMI 127 dated 9.12.2013), wherein it was held that the contributions, if paid before the due date prescribed u/s. 139(1) of the Act, the same is allowable u/s. 36(1)(va) of the Act since the provisions of section 43B of the Act override section 36(va) of the Act. The Ld. CIT(A), by placing reliance on the decision rendered by Hon'ble Gujarat High Court in the case of State Road Transport Corporation (MANU/GJ/0940/2013 : 366 ITR 170), upheld the disallowance. Aggrieved the assessee has filed this appeal before us.

4. We heard the parties and perused the record. We notice that the decision rendered by Hon'ble jurisdictional Karnataka High Court in the case of M/s. Spectrum Consultants India Pvt. Ltd. (supra) and also in the case of M/s. Essae Teraoka Pvt. Ltd. Vs. DCIT MANU/KA/0136/2014 : 366 ITR 408 supports the case of the assessee. There should not be any dispute that the decision rendered by the jurisdictional High Court is binding on all authorities below it. Hence, the Ld CIT(A) was not justified in placing reliance on the decision rendered by non-jurisdictional High Court, when there is a decision of jurisdictional High Court on the very same issue.

5. We notice that the coordinate bench has considered an identical issue in the case of Nirmal Enviro Solutions Pvt. Ltd. Vs. CIT (ITA No. 315/Bang/2021 dated 12.10.2021) relating to assessment year 2018-19, wherein the Tribunal following the decision rendered by another coordinate bench in the case of the Continental Restaurant & Caf Company Vs. ITO (ITA No. 388/Bang/2021 dated 11.10.2021) has held that disallowance u/s. 36(1)(va) r.w.s. 43B of the Act cannot be made for assessment year 2018-19. For the sake of convenience, we extract below the operative portion of the order passed by the coordinate bench in the case of Nirmal Enviro Solutions Pvt. Ltd. (supra).

"7. We have heard rival submissions and........