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2022 (3) TMI 1237 - AT - Income TaxDeposit of employees contributions qua ESI PF after the due date - As argued Assessee has deposited the employee s contributions towards ESI PF before the due date of filing of the return of income u/s 139 of the Act, hence no disallowance is warranted - Scope of amendment - HELD THAT - ITAT including Hyderabad Bench in the case of Value Momentum Software Services Pvt. Ltd. 2021 (5) TMI 989 - ITAT HYDERABAD have taken into consideration the identical issue qua applicability of the amendment to Sections 36(1)(va) and Section 43B of the Act, by inserting Explanations by the Finance Act, 2021 and clearly held that the amendment shall be applicable from 1st April, 2021 onwards . It is also relevant to note that the CBDT has also issued Memorandum of Explanation qua applicability of the amended provisions of Sections 36(1)(va) 43B of the Act w.e.f. 1st April, 2021 and Assessment Year 2021-21 onwards, hence there is no doubt qua applicability of the amended provisions referred above, prospectively. The second aspect as considered by the ld. CIT(A) qua applicability of the amended provisions of Sections 36(1)(va) and 43B of the Act to the case in hand, is also un-sustainable. - Decided in favour of assessee.
Issues involved:
Deposit of employees' contributions qua ESI & PF after the due date but before the due date of filing return of income u/s.139(1) of the Act resulting in disallowance by Assessing Officer. Analysis: Issue 1: Deposit of employees' contributions after the due date but before the due date of filing return of income u/s.139(1) of the Act The Assessee appealed against the order of the ld. Commissioner of Income tax (Appeals) regarding the disallowance of &8377; 74,76,708/- by the Assessing Officer for depositing employees' contributions towards ESI & PF after the due date. The Assessee contended that since the contributions were deposited before the due date of filing the return of income u/s 139 of the Act, no disallowance was warranted. The Assessee cited various judgments to support this claim. The Ld. Commissioner upheld the disallowance/additions based on two main aspects: non-applicability of Section 43B of the Act to employees' share qua ESI & PF and applicability of amended provisions of Sections 36(1)(va) and 43B of the Act introduced by the Finance Act, 2021. Issue 2: Applicability of legal provisions and judicial precedents The Assessee relied on judgments from various High Courts supporting the deduction of employees' share of ESI & PF u/s.43B of the Act if deposited before filing the return of income u/s.139(1) of the Act. High Courts, including Punjab and Haryana High Court and Jurisdictional High Court, have held in favor of the Assessee's claim. The ITAT, following judicial precedents, emphasized that legislative intent was to allow expenditure only when payment was actually made, not to treat belated payments as deemed income of the employer. The Tribunal noted that the amended provisions of Sections 36(1)(va) and 43B of the Act, inserted by the Finance Act, 2021, were applicable prospectively from 1st April, 2021 onwards, as clarified by the CBDT. Conclusion The Tribunal found the disallowance made by the Assessing Officer and confirmed by the CIT(A) to be unsustainable based on the discussions and observations. Consequently, the disallowances amounting to &8377; 74,76,708/- were deleted, and the appeal of the Assessee was allowed. This detailed analysis of the legal judgment highlights the issues involved, the arguments presented by the parties, the applicability of legal provisions, and the final decision rendered by the Tribunal.
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