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2022 (2) TMI 1026 - AT - Income TaxLate payments towards ESI and EPF u/s 36(1)(va) - Payment before furnishing the return of income under section 139(1) - HELD THAT - In the present case, it is not in dispute that the assessee deposited the contribution of PF ESI belatedly 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) of the Act. It is noticed that an identical issue having similar facts has already been adjudicated in RAJA RAM 2021 (11) TMI 370 - ITAT CHANDIGARH wherein addition 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 both 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. Disallowance of late payments towards ESI and EPF under section 36(1)(va) of the Income Tax Act, 1961. Detailed Analysis: 1. Disallowance of Late Payments towards ESI and EPF: The primary issue in this case revolves around the disallowance made by the Assessing Officer (A.O.) on account of late payments towards Employees' State Insurance (ESI) and Employees' Provident Fund (EPF) under section 36(1)(va) of the Income Tax Act, 1961. The disallowance was sustained by the Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi. The assessee appealed against this decision, arguing that the contributions were deposited before the filing of the return of income under section 139(1) of the Act, despite being late as per the respective statutes. The Tribunal noted that this issue has been adjudicated in several cases with similar facts, where it was held that if the contributions are deposited before the due date of filing the return of income, they should not be disallowed. The Tribunal referenced multiple decisions from various benches of the ITAT, including: - Raja Ram Vs. ITO, Yamunanagar: It was held that the disallowance under section 36(1)(va) is not justified if the contributions are made before the filing of the return. - Harendra Nath Biswas vs. DCIT, Kolkata: The ITAT Kolkata Bench ruled that the amendment by the Finance Act, 2021, which inserted Explanation 5, is not retrospective and thus not applicable to the assessment year 2019-20. - Salzgitter Hydraulics Private Ltd., Hyderabad vs. ITO: The ITAT Hyderabad Bench held that the disallowance is not sustainable since the contributions were made before the due date of filing the return, despite the legislative amendments. The Tribunal also cited decisions from the Hon'ble Calcutta High Court in Vijayshree Ltd., where it was held that the deletion of the amount paid for employees' contributions beyond the due date was justified if the payments were made before the filing of the return of income. The Supreme Court's decision in CIT vs. Alom Extrusion Ltd. was also referenced, which supported the retrospective application of the amendment to section 43(B). Further, the Tribunal referred to the Hon'ble Rajasthan High Court's decisions in CIT vs. State Bank of Bikaner & Jaipur and subsequent cases, which consistently held that contributions paid after the due date but before the filing of the return cannot be disallowed under section 43B read with section 36(1)(va). The Tribunal concluded that the facts of the present case are identical to those in the aforementioned cases. Therefore, following the precedents set by various benches of the ITAT and the High Courts, the Tribunal deleted the disallowances sustained by the CIT(A). Conclusion: The appeal of the assessee was allowed, and the disallowances made on account of late payments towards ESI and EPF were deleted, provided the contributions were deposited before the due date of filing the return of income under section 139(1) of the Act.
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