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2022 (3) TMI 132 - AT - Income TaxDelayed deposit of employees contribution to PF and ESI u/s 36(1)(va) read with Section 2(24)(x) - HELD THAT - We find that the issue is covered in favour of the assessee as the assessment year involved is AY 2017-18 and the Explanation-5 inserted by Finance Act, 2021 to section 43B w.e.f. 01.04.2021 is not applicable to the assessment year under consideration. We do not accept the Ld. CIT(A) s stand denying the claim of assessee since assessee delayed the employees contribution of EPF ESI fund and as per the binding decision of the Hon ble High Court in Vijayshree Ltd. 2011 (9) TMI 30 - CALCUTTA HIGH COURT u/s 36(1)(va) of the Act since assessee had deposited the employees contribution before filing of Return of Income. Therefore, the assessee succeeds and we allow the appeal of the assessee.
Issues:
Disallowance of Employees' share towards Provident Fund Contribution after the due date under section 36(1)(va) of the Income Tax Act, 1961. Applicability of amendments made by the Finance Act 2021 in section 36(1)(va) and section 43B to the assessment year 2018-19. Issue 1: Disallowance of Employees' share towards Provident Fund Contribution after the due date under section 36(1)(va) of the Income Tax Act, 1961: The appellant challenged the disallowance of ?1,18,39,484 being the deposit of Employees' share towards Provident Fund Contribution after 'the due date' within the meaning of Explanation 1 of section 36(1)(va) of the Act. The appellant contended that despite the deposit being made well within the due date of furnishing the return of income, the disallowance was confirmed by the Learned Commissioner of Income Tax (Appeals). The appellant relied on various court decisions supporting the deductibility of 'Employees' contribution to Provident Fund' paid within the due date of furnishing the return of income. The Tribunal found that the issue was covered in favor of the assessee as the assessment year involved was AY 2017-18, and the Explanation-5 inserted by Finance Act, 2021 to section 43B was not applicable to the assessment year under consideration. The Tribunal referred to the decision of the Hon'ble Calcutta High Court in a similar case and allowed the appeal, setting aside the impugned order of the CIT(A) and ordering the deletion of the impugned addition. Issue 2: Applicability of amendments made by the Finance Act 2021 in section 36(1)(va) and section 43B to the assessment year 2018-19: The appellant also challenged the applicability of the amendments made by the Finance Act 2021 in section 36(1)(va) and section 43B to the assessment year 2018-19. The appellant argued that the amendments were made effective from 01.04.2021 to the assessment year 2021-22 and subsequent years, not to the assessment year 2018-19. The Tribunal, in line with the decision of the Hon'ble Calcutta High Court, held that since the Explanation-5 was inserted by the Finance Act, 2021, with effect from 01.04.2021, and the relevant assessment year was AY 2019-20, the law laid down by the High Court would apply. The Tribunal dismissed the appeal of the Revenue, emphasizing that the amendments were not made retrospectively and allowed the appeal of the assessee, setting aside the CIT(A)'s stand and ordering the deletion of the impugned addition. In conclusion, the Tribunal ruled in favor of the appellant on both issues, holding that the Employees' share towards Provident Fund Contribution deposited before the due date of filing the return of income was allowable as a deduction under the Income Tax Act, 1961. Additionally, the Tribunal found that the amendments made by the Finance Act 2021 were not applicable to the assessment year 2018-19, thereby allowing the appeal and directing the deletion of the impugned addition made by the lower authorities.
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