2022 (1) TMI 1060 - ITAT ALLAHABAD

Allowability of deduction u/s 36(1)(va) read with Section 2(24)(x) - delayed deposit of employee contribution towards PF/ESI - Deposits beyond the time provided under the relevant statute governing PF/ESI but deposited before the due date for filing of return of income as prescribed u/s 139(1) - Scope of amendment by Finance Act , 2021 in Section 36(1)(va) and 43B of the 1961 Act - HELD THAT:- Amendment made by Finance Act, 2021 in Section 36(1)(va) and 43B are prospective in nature and shall be applicable from ay:2021- 22 and subsequent assessment years, and consequently shall not have any retrospective effect.

Hon'ble Jurisdictional High Court in the case of Sagun Foundry Private Limited [2016 (12) TMI 1479 - ALLAHABAD HIGH COURT] has held that deduction is to be allowed for belated payment of employee contribution to PF/ESI which is deposited beyond the due date stipulated under the relevant statutes governing PF/ESI but the same stood deposited before the due date for filing of return of income as is prescribed u/s 139(1) of the 1961 Act. It is also to be noted that while deciding this issue in Sagun Foundry(supra) in favour of the tax-payer , the Hon’ble Allahabad has duly discussed Hon’ble Supreme Court decision in Alom Extrusion [2009 (11) TMI 27 - SUPREME COURT] and then decided this issue in favour of the tax-payer.

Respectfully following the aforesaid decision in assessee’s own case for ay:2018-19 [2022 (1) TMI 1000 - ITAT ALLAHABAD] in which both of us were part of the Division Bench who pronounced the order, we hold that in the instant appeal for ay: 2019-20 if the employee share of PF/ESI is deposited by employer to the credit of employee with the relevant fund maintained for PF/ESI before the due date of filing of return of income u/s 139(1) of the 1961 Act, then the assessee shall be entitled for deduction u/s 36(1)(va) of the 1961 Act. The assessee’s counsel has filed tax-audit report in which detail/ bifurcations of employee share of PF/ESI along with date of payment is mentioned(page 66/pb), but challans are not filed. The said tax-audit report is placed on record in file.

Thus for limited purposes , we are directing AO to verify the challans evidencing deposit of aforesaid employee share of PF/ESI and that it was deposited before the due date prescribed for filing of return of income u/s 139(1), before allowing claim of deduction u/s 36(1)(va) of the 1961 Act. The assessee is directed to file before AO complete details/bifurcation of employees share of PF/ESI which was added to income of the assessee u/s 36(1)(va) read with Section 2(24)(x) along with relevant paid challans, for verification. While passing the above order, we also note that several Division Benches of ITAT across Country have now passed appellate orders even after considering the amendments made to Section 36(1)(va) and 43B of the 1961 Act by Finance Act, 2021, holding that if the employee share of PF/ESI is deposited by employer to the credit of employee with the relevant fund maintained for PF/ESI before the due date of filing of return of income u/s 139(1) of the 1961 Act, then the tax-payer shall be entitled for deduction u/s 36(1)(va) - thus assessee succeeds in this appeal