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2022 (4) TMI 1541 - AT - Income TaxDisallowance towards late payment of employees contribution to provident fund and ESI - Contribution made admittedly after the due date as prescribed under the relevant statute but before the due date of filing of the return - HELD THAT - Hon ble SC in case of M/s Rajasthan State Beverages Corporation Ltd 2017 (7) TMI 1087 - SC ORDER Amount claimed on payment of PF and ESI having been deposited on or before due date of filing of returns, same could not be disallowed u/s 43B or u/s 36(1)(va). The disputed controversy in the present case has been answered accordingly and the dispute which is for the assessment year 2020-21 and before is decided in favour of the assessee. AO is directed accordingly to delete the additions made for delayed remittance of employee s contribution to PF / ESI after the due date under respective statutes but paid before the due date of filing of return of income u/s 139(1) of the income tax act. As following the decision of Rukmani Infra Projects Ltd. 2022 (3) TMI 1536 - ITAT CUTTACK we set aside the orders of lower authorities and delete the addition made by the AO and confirmed by the CIT(A) on account of delay in depositing the employees contribution to PF ESI. Decided in favour of assessee.
Issues Involved:
- Confirming the addition of Rs.1,81,662/- towards late payment of employees' contribution to provident fund (PF) and Employees' State Insurance (ESI). Issue-wise Detailed Analysis: 1. Background and Appeal: The appeal was filed by the assessee against the order passed by the National Faceless Appeal Centre (NFAC), Delhi, dated 27.08.2021, for the assessment year 2017-2018. The sole issue in the appeal was the confirmation of the addition of Rs.1,81,662/- due to the late payment of employees' contributions to PF and ESI. 2. Examination of the Assessment Record: The assessee filed a return of income on 07.11.2017, declaring a total income of Rs.49,58,920/-. The Assessing Officer (AO) made an addition due to the delay in depositing employees' contributions to PF and ESI, which was confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)]. The CIT(A) verified that the contributions were deposited beyond the due date prescribed under the relevant Act but before the due date for filing the return under section 139(1) of the Income Tax Act. 3. Applicability of Finance Bill, 2021: The CIT-DR relied on the orders of the authorities below and the amendment brought by the Finance Bill, 2021. However, the assessment year under consideration was 2017-2018, making the amendment inapplicable. The Tribunal referenced the case of Rukmani Infra Projects Ltd., ITA No. 358/CTK/2017, where it was established that the amendment in the Finance Bill, 2021, would apply from the assessment year 2021-22 onwards. 4. Judicial Precedents and Tribunal Findings: The Tribunal cited multiple judicial decisions affirming that the amendment by the Finance Act, 2021, is prospective and not retrospective. Key judgments included: - Jagmohan Singh Vs DCIT (ITAT Chandigarh): Held that contributions deposited before the due date of filing the return under section 139(1) are allowable. - Stirred Creative Advertising Pvt. Ltd. Vs DCIT (ITAT Bangalore): Confirmed that no disallowance could be made for contributions paid before the due date of filing the return, despite being beyond the date mentioned in the respective Act. - Adyar Ananda Bhavan Sweets India P Ltd Vs ACIT (ITAT Chennai): Clarified that the amendment is prospective and not applicable to earlier assessment years. - Pachouli Wellness Clinic LLP Vs ITO (ITAT Delhi): Reinforced that delayed payments are allowable if deposited before the return filing due date. - Star Facilities Management Limited VS ITO (ITAT Delhi): Emphasized that no disallowance can be made if contributions are deposited before the return filing due date. 5. Perspective on Amendment and Legal Principles: The Tribunal discussed the principles of interpreting amendments, highlighting that amendments intended to remove hardship are generally prospective. The Tribunal referenced the Supreme Court's stance in cases like CIT Vs. Vatika Township Private Limited, which held that amendments should be prospective unless explicitly stated otherwise. 6. Conclusion and Order: Given the consistent judicial precedents and the prospective nature of the amendment, the Tribunal concluded that the addition of Rs.1,81,662/- for the delayed payment of employees' contributions to PF and ESI was not justified. The Tribunal set aside the orders of the lower authorities and deleted the addition, allowing the appeal in favor of the assessee. 7. Result: The appeal of the assessee was allowed, and the addition of Rs.1,81,662/- was deleted. The order was pronounced in the open court on 06/04/2022.
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