2022 (8) TMI 1295 - AT - Income Tax

Addition with the aid of section 36(1)(va) r.w.s. 2(24)(x) - employees contributions towards PF ESI were not deposited by the assessee within the due date provided under these two Acts - HELD THAT - ITAT, Kolkata 2022 (3) TMI 961 - ITAT KOLKATA has specifically propounded that if employees contribution received by an assessee and paid to ESI and PF accounts before the due date of filing of the return, then the assessee will be eligible to claim the deduction of such amounts. With the assistance of ld. representatives, we have specifically gone through the record and find that payments have been made within the due dates of filing of the return. With the above observation, these appeals of the assessee are treated as allowed. The disallowances stand deleted - Assessee appeal allowed..

Summary

Issues involved:
Confirmation of additions under section 36(1)(va) read with section 2(24)(x) for non-deposit of employees' contributions towards PF & ESI within the due date.

Detailed Analysis:

1. Application for Out of Turn Hearing:
The authorized representative of the assessee filed an application for out of turn hearing, citing the issue of confirmation of additions for non-deposit of employees' contributions towards PF & ESI within the due date. The assessee contended that the payments were made before the due date of filing the return, relying on decisions of the Jurisdictional High Court and a Coordinate Bench. The Senior D.R. did not possess the files but acknowledged the smallness of the issue and the coverage by the Jurisdictional High Court, leading to the grant of out of turn hearing on the same day.

2. Merit of the Appeals:
The Tribunal proceeded to decide the appeals on merit, considering recent decisions on similar issues. Reference was made to a previous order by the ITAT, Kolkata which discussed the impact of the amendment brought in by the Finance Act, 2021. The amendment disallowed employees' contributions to PF and ESI if not made within the prescribed due date, affecting the deduction eligibility. The Tribunal analyzed the retrospective or prospective nature of the amendment, relying on legislative intent and relevant case law to conclude that the amendment was prospective. Consequently, the appeals were treated as allowed, and the disallowances were deleted in favor of the assessee.

3. Decision and Outcome:
In line with the Coordinate Bench's order, both appeals of the assessee were allowed, leading to the deletion of the disallowances. The Tribunal pronounced the order in open court on August 2, 2022, in favor of the assessee, based on the timely payment of employees' contributions towards PF & ESI before the due date of filing the return.

This detailed analysis outlines the application for out of turn hearing, the examination of the appeals on merit, and the ultimate decision in favor of the assessee based on the timely payment of employees' contributions, as per the relevant legal provisions and precedents cited during the proceedings.