2022 (2) TMI 182 - AT - Income Tax

Employees contribution to PF ESI - amount same was not paid before the due date as provided u/s 36(1)(va) - HELD THAT - If the assessee has paid the PF and ESI payments before the due date of filing of return income u/s 139(1) of the Act, no disallowance is warranted as held by the coordinate bench in case in case of Value Momentum Software Services Private Limited 2021 (5) TMI 989 - ITAT HYDERABAD . We direct the AO to delete the addition made towards employees PF ESI contribution and confirmed by the CIT (A) and accordingly, the grounds raised by the assessee on this issue are allowed.

Summary

Issues:
1. Addition of employees' contribution to PF & ESI made after the due date under section 36(1)(va) of the Income Tax Act.

Analysis:
The appeal was filed against the CIT(A)'s National Faceless Appeal Centre order for the assessment year 2018-19 concerning the addition of ?1,04,21,060 towards employees' contribution to PF & ESI made after the due date as per section 36(1)(va) of the Income Tax Act. The assessee contended that the contributions were paid before the due date of filing the return of income under section 139(1) of the Act, thus challenging the disallowance. The CIT(A) upheld the disallowance made by the Assessing Officer.

Upon review, the Tribunal referred to a previous judgment by the ITAT Hyderabad in a similar case where it was held that if the assessee pays the PF and ESI contributions before the due date of filing the return of income, no disallowance is warranted. Citing this precedent, the Tribunal directed the Assessing Officer to delete the addition of ?1,04,21,060 made towards employees' PF & ESI contribution. Consequently, the grounds raised by the assessee on this issue were allowed, and the appeal was allowed in favor of the assessee.

In conclusion, the Tribunal's decision was based on the interpretation of the provisions of section 36(1)(va) and section 139(1) of the Income Tax Act, emphasizing that timely payment before the due date of filing the return of income absolves the assessee from disallowance. The judgment highlighted the importance of adhering to statutory timelines and provided relief to the assessee based on established legal principles and precedents.

This detailed analysis of the judgment showcases the legal intricacies involved in the dispute over the addition of employees' contribution to PF & ESI and how the Tribunal's decision was reached based on statutory provisions and relevant case law.