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2022 (3) TMI 1124 - AT - Income TaxDelayed employees' contribution towards ESI and PF - though with the delay of few days from the due date mentioned in the respective Statutes, however, the same was deposited well before the due date of filing of return of income u/s. 139(1) - HELD THAT - CIT(A) has referred to the amendment brought in by the Finance Act, 2021 wherein an explanation has been introduced to Sections 36(1)(va) and u/s. 43B of the Income Tax Act. It is a consistent position across various Benches of the Tribunal including Chandigarh Benches 2021 (11) TMI 1017 - ITAT CHANDIGARH that the amendment which has been brought in by the Finance Act, 2021 shall apply w.e.f. assessment year 2021-22 and subsequent assessment years and the impugned assessment year being assessment year 2018-19, the said amendment cannot be applied in the instant case. The addition made by way of adjustment while processing the return of income u/s 143(1) so made by the CPC towards the deposit of employees' contribution towards ESI and PF paid before the due date of filing of the return of income u/s.139(1) of the Act, is hereby directed to be deleted - Decided in favour of assessee.
Issues:
Appeal against disallowance of employees' contribution to ESI & PF made by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre for assessment year 2018-19. Analysis: The appeal was filed by the assessee against the disallowance of employees' contribution to ESI & PF. The assessee contended that the contributions were deposited before the due date of filing the return of income under section 139(1) of the Income Tax Act, 1961. The assessee relied on various court decisions, including those of the Punjab & Haryana High Court and the Supreme Court, to support their argument. The assessee argued that the Finance Act, 2021 amendment, which introduced Explanation-5, should be applied prospectively from assessment year 2021-22 onwards. The Tribunal noted that the amendment was not applicable to the assessment year 2018-19 and directed the deletion of the disallowance amounting to ?9,63,594 made by the CPC. The Departmental Representative (DR) argued that the amendment to section 36(1)(va) of the Act was clarificatory and had retrospective effect. The DR contended that the law was clear that employees' contribution would not be allowed as a deduction if there was any delay in deposit as per the due dates specified in the relevant Statutes. The DR supported the order of the Commissioner of Income Tax (Appeals) sustaining the disallowance. The Tribunal considered the divergent views of various High Courts and noted that the jurisdiction over the Assessing officer lay with the Punjab & Haryana High Court. The Tribunal emphasized that the amendment by the Finance Act, 2021 was applicable from assessment year 2021-22 onwards and could not be applied retrospectively to the assessment year 2018-19. Therefore, based on the decisions of the High Courts and Coordinate Benches of the Tribunal, the Tribunal directed the deletion of the disallowance amount. In conclusion, the Tribunal allowed the appeal of the assessee, setting aside the impugned order and directing the Assessing Officer to delete the disallowance of employees' contribution towards ESI and PF. The Tribunal emphasized the binding nature of decisions by the jurisdictional Punjab & Haryana High Court and the prospective application of the Finance Act, 2021 amendment.
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