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2022 (1) TMI 1084 - AT - Income TaxDelayed payment of employees contribution to PF and ESI - Contribution paid after the due dates prescribed in the relevant Statutes but before the due date of filing of return under section 139(1) - HELD THAT - As the issue involved in the present appeal as well as the material facts relevant thereto are similar to the case of Lumino Industries Limited 2021 (11) TMI 926 - ITAT KOLKATA wherein allow the claim of deduction in respect of employees contribution shares towards ESI, PF, by the assessee before the due date of filing of return u/s 139(1) - we respectfully follow the decision rendered by the Tribunal in the said case and delete the disallowance made by the Assessing Officer and confirmed by the ld. CIT(Appeals) on account of delayed payment of employees contribution towards PF and ESI. - Decided in favour of assessee.
Issues Involved:
1. Disallowance of ?22,29,788/- for delayed payment of employees' contribution to PF and ESI. Detailed Analysis: 1. Disallowance of ?22,29,788/- for delayed payment of employees' contribution to PF and ESI: The appeal concerns the disallowance of ?22,29,788/- due to delayed payment of employees' contribution to PF and ESI, which was paid after the due dates prescribed by the relevant statutes but before the due date of filing the return under section 139(1) of the Income Tax Act, 1961. The Tribunal reviewed arguments from both sides and examined relevant material. It noted that a similar issue was addressed in the case of Lumino Industries Limited, where the Tribunal decided in favor of the assessee, allowing the deduction if the payment was made before the due date of filing the return of income under section 139(1). The Tribunal observed that the Assessing Officer (AO) had disallowed the payment based on CBDT Circular No. 22/2015 and judicial pronouncements that required the contributions to be deposited within the due dates prescribed under the respective PF and ESI Acts. The CIT(A) upheld the AO's decision, interpreting the Finance Act, 2021 amendment as clarificatory and retrospective. The assessee's representative argued that the amendment by the Finance Act, 2021, is prospective, citing the Supreme Court's decision in M/s M.M. Aqua Technologies Ltd. vs. CIT, Delhi, which held that clarificatory amendments are not presumed to be retrospective if they alter the existing law. The representative further supported this with the Supreme Court's decision in CIT vs. Vatika Township Pvt. Ltd., which emphasized that legislative intent, as indicated in the "Notes on Clauses," determines whether an amendment is retrospective or prospective. The Tribunal noted that the Finance Act, 2021, explicitly stated that the amendments would take effect from 1st April 2021 and apply to assessment year 2021-22 and subsequent years. Therefore, the amendment is prospective. The Tribunal also considered the binding decisions of the Jurisdictional Calcutta High Court, which held that payments made before the due date of filing the return under section 139(1) are allowable deductions. The Tribunal concluded that the CIT(A) erred in interpreting the amendment as retrospective. It relied on the Supreme Court's decisions and the Jurisdictional Calcutta High Court's rulings, which supported the assessee's claim. Consequently, the Tribunal set aside the CIT(A)'s order and directed the AO to allow the deduction for the employees' contributions paid before the due date of filing the return under section 139(1). In conclusion, the Tribunal allowed the appeal in favor of the assessee, deleting the disallowance made by the AO and confirmed by the CIT(A) on account of delayed payment of employees' contribution towards PF and ESI.
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