Contribution Towards NPS Made Prior To Filing Of Return: ITAT Deletes Addition

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) has deleted the addition of employees contribution towards the National Pension System (NPS) as the contribution towards NPS made prior to filing of the return.

The bench of T.R. Senthil Kumar (Judicial Member) and Annapurna Gupta (Accountant Member) has observed that NPS is regulated by the Pension Fund Regulatory and Development Authority Act, 2013 (PFRDA Act). There is no due date prescribed by the PFRDA as to when the payment is required to be made to the NPS account. Further section 12(3)(iii) of the PFRDA Act, 2013 clearly prohibits the provisions of this Act from applying to the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. Thus the adjustment made on the payment under NPS by CPC is not justified as there is no due date prescribed in the respective PFRDA Act, 2013 and all the payment has been duly made before filing of the Return of Income.

The appellant/assessee is a company engaged in port activities that filed its Return of Income, declaring total income under normal provisions of the Act and book profit under Section 115JB.

The return was taken for prima facie adjustment, and a communication was sent to the assessee as to why not disallow Rs. 8,19,544/- being belated payment of employees contribution to the PF Fund.

The assessee replied that it paid the employee's contribution to the National Pension Scheme before the due date of filing the Return of Income, as there is no due date prescribed under the National Pension Scheme. Thus, there is no delay in payment of the employee's contribution and therefore no disallowance.

However, the reply was rejected by CPC, who added Rs. 8,19,544 as the income of the assessee and demanded tax.

The assessee filed an appeal before the National Faceless Assessment Centre (NFAC). Before NFAC, the assessee filed a detailed submission about the National Pension Scheme. The assessee pleaded similar disallowance made for the earlier assessment year 2018-19, which was deleted by NFAC, and therefore requested to delete the addition made by CPC. However, NFAC dismissed the appeal filed by the assessee.

The tribunal, while allowing the appeal, held that the amount of Rs. 8,19,544 is treated to be allowable. The addition made by CPC is liable to be deleted. When the assessee had replied to the communication to the CPC and explained the facts, the CPC was not correct in ignoring the reply and making the disallowance.

Counsel For Appellant: Dhrunal Bhatt

Counsel For Respondent: Nitin Vishnu Kulkarni

Case Title: Adani Petronet Versus AO

Case No.: ITA No. 343/Ahd/2021

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