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2021 (10) TMI 104 - AT - Income TaxAddition u/s 36(1)(va) - late deposit of employees share of PF ESI which were deposited after the due date but before the due date of filing of return of income - scope of amendment - HELD THAT - It is not in dispute that the assessee deposited the contribution of PF ESI belated in terms of section 36(1)(va) of the Act, however, the said deposits were made prior to filing of return of income u/s 139(1). Thus as relying on HARENDRA NATH BISWAS 2021 (7) TMI 942 - ITAT KOLKATA , SALZGITTER HYDRAULICS PRIVATE LIMITED 2021 (6) TMI 1059 - ITAT HYDERABAD and MOHANGARH ENGINEERS AND CONSTRUCTION COMPANY 2021 (8) TMI 563 - ITAT JODHPUR additions made by the Assessing Officer and sustained by the Ld. CIT(A) on account of deposits of employees contribution of ESI PF prior to filing of the return of income u/s 139(1) of the Act, in all the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5, are deleted. - Decided in favour of assessee.
Issues Involved:
1. Sustenance of the addition made by the Assessing Officer on account of late deposit of employees' share of PF & ESI. Issue-wise Detailed Analysis: 1. Sustenance of the Addition Made by the Assessing Officer on Account of Late Deposit of Employees' Share of PF & ESI: The primary issue in these appeals is the sustenance of the addition made by the Assessing Officer due to the late deposit of employees' share of Provident Fund (PF) and Employees' State Insurance (ESI). The assessees deposited these amounts after the due date but before the due date of filing the return of income under Section 139(1) of the Income Tax Act, 1961 (referred to as 'the Act'). The Assessing Officer made the additions because the assessees did not deposit the amounts of employees' contributions as per the provisions of Section 36(1)(va) of the Act. The CIT(A) upheld the Assessing Officer's action, citing amendments made to Sections 36 and 43B by the Finance Act, 2021. Specifically, the amendments clarified that the provisions of Section 43B shall not apply to the determination of the "due date" under Section 36(1)(va). The CIT(A) observed that the amendments were intended to clarify that the due date for depositing employees' contributions is the date prescribed under the respective statutes and not the date of filing the return of income. The assessees, in their appeals, argued that the issue is covered by various decisions of different Benches of the ITAT, including the jurisdictional ITAT, Jodhpur Bench. They cited several cases where similar issues were decided in favor of the assessees, including: - Mohangarh Engineers and Construction Company ITA No. 05/Jodh/2021 - Pali Urban Cooperative Bank Ltd. ITA No. 28 & 29/Jodh/2021 - U & T Tractor Spares Pvt. Ltd. ITA No. 43/Jodh/2021 - Harendra Nath Biswas v/s DCIT ITA No. 186/Kol/2021 - Salzgitter Hydraulics Pvt. Ltd v/s ITO ITA No. 644/Hyd/2020 The Tribunal considered the submissions of both parties and reviewed the material on record. It noted that the assessees had deposited the contributions before the due date of filing the return of income under Section 139(1) of the Act. The Tribunal referred to several decisions where it was held that if the PF and ESI contributions are deposited before the due date of filing the return of income, they cannot be disallowed under Section 43B read with Section 36(1)(va) of the Act. In particular, the Tribunal cited the decision in Harendra Nath Biswas vs. DCIT, where the ITAT Kolkata Bench held that the amendments made by the Finance Act, 2021, were not retrospective and thus did not apply to the assessment year 2019-20. The Tribunal also referred to the decision in Salzgitter Hydraulics Pvt. Ltd vs. ITO, where the ITAT Hyderabad Bench held that the amendments made by the Finance Act, 2021, apply prospectively from 1.4.2021. Further, the Tribunal noted that the jurisdictional Rajasthan High Court, in several decisions, had consistently held that PF and ESI contributions deposited before the due date of filing the return of income cannot be disallowed. These decisions include CIT vs. State Bank of Bikaner & Jaipur, CIT vs. Jaipur Vidyut Vitran Nigam Ltd., CIT vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd., and CIT vs. Rajasthan State Beverages Corporation Limited. The Tribunal concluded that the facts of the present cases are identical to those in the cited decisions. Therefore, it followed the earlier orders of different Benches of the ITAT and the jurisdictional High Court. The Tribunal held that the impugned additions made by the Assessing Officer and sustained by the CIT(A) on account of deposits of employees' contributions of ESI & PF, prior to the amendment made by the Finance Act, 2021, are deleted. Conclusion: The Tribunal allowed all the appeals of the assessees, concluding that the late deposits of employees' share of PF & ESI, made before the due date of filing the return of income, cannot be disallowed under Section 43B read with Section 36(1)(va) of the Act. The amendments made by the Finance Act, 2021, apply prospectively and do not affect the assessment years under consideration.
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