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2021 (12) TMI 1199 - AT - Income TaxDelay in deposit of Employees contribution to PF and ESI - Payment deposited before the due date of filing IT Return U/s 139(1) - AR submitted that the assessee-company deposited employee s contribution of PF/ESI though with a delay of few days from the due dates mentioned in the respective Acts, however the same was deposited well before the due date of filing of return of income - HELD THAT - Admittedly and undisputedly, the employees contribution to ESI and PF collected by the assessee from its employees have been deposited well before the due date of filing of return of income u/s 139(1) - it is noted that the ld CIT(A) has referred to the explanation to section 36(1)(va) and section 43B introduced by the Finance Act, 2021 and has also referred to the rationale of the amendment as explained by the Memorandum in the Finance bill, 2021, however, he has simply failed to consider the express wordings in the said memorandum which says these amendments will take effect from 1st April, 2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years . The impugned assessment year is assessment year 2019-20 and therefore, the said amendment cannot be applied in the instant case. The addition by way of adjustment while processing the return of income u/s 143(1) so made by the CPC towards the deposit of the employees s contribution towards ESI and PF though paid before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted. - Decided in favour of assessee.
Issues Involved:
Appeal against disallowance of employee's contribution to PF/ESI in income tax return processing under Section 143(1) for A.Y. 2019-20. Detailed Analysis: 1. Disallowance of Contribution in Income Tax Return Processing: The appeal was filed against the disallowance of employee's contribution to PF/ESI in the income tax return processing under Section 143(1) for the assessment year 2019-20. The assessee contended that the contribution was deposited before the due date of filing the return of income under Section 139(1) of the Income Tax Act. The assessee relied on various court decisions to support their argument, emphasizing that the disallowance was unjustified and unlawful. 2. Arguments of the Parties: During the hearing, the assessee's representative argued that the contribution was deposited before the due date of filing the return of income, hence no disallowance should be made under Section 36(1)(va) of the Act. The Revenue, on the other hand, argued that the disallowance was in accordance with the law, citing the amendment brought in by the Finance Act, 2021, which clarified that the contribution should be paid within the prescribed due dates. 3. Judicial Precedents and Interpretation: The Tribunal referred to a previous case where a similar issue was addressed, highlighting that the employees' contribution to ESI and PF was deposited before the due date of filing the return of income under Section 139(1). The Tribunal also discussed the decisions of various High Courts, including the Rajasthan High Court, which consistently held that such contributions cannot be disallowed if paid before the due date of filing the return of income. 4. Decision and Rationale: After considering the arguments and legal precedents, the Tribunal held that the disallowance made by the CPC towards the employees' contribution to ESI and PF, even though paid before the due date of filing the return of income, was not justified. The Tribunal emphasized that the amendment introduced by the Finance Act, 2021, did not apply to the assessment year in question (2019-20), and therefore, the disallowance was directed to be deleted. 5. Conclusion: The Tribunal pronounced the order in favor of the assessee, directing the deletion of the disallowance made in the income tax return processing under Section 143(1). The decision was based on the interpretation of relevant legal provisions, court decisions, and the specific circumstances of the case, highlighting the importance of timely payment of employee contributions while considering deductions under the Income Tax Act.
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