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2022 (4) TMI 440 - AT - Income TaxDeduction of employees' contribution towards PF ESI paid before the due date of filling of the return - Scope of amendment to section 36(1)(va) of the Act and section 43B - HELD THAT - Recently in the case of Lumino Industries Ltd. 2021 (11) TMI 926 - ITAT KOLKATA has held that the amendment brought in by the Finance Act 2021 w.e.f. 01.04.2021 inserting explanation to section 36(1)(va) of the Act and section 43B of the Act are prospective in nature and shall be inforce from assessment 2021-22 and onwards and therefore, for the period before such amendment, if assessee has deposited the contribution of PF and ESI for the year concerned before the due date of filing return of income u/s 139(1) of the Act, which in the instant case is well proved by the finding of Ld. CIT(A) itself, no disallowance could be made u/s 36(1)(va) of the Act. Thus, no interference is called for in the finding of Ld. CIT(A) deleting the said disallowance. Appeal of assessee allowed.
Issues Involved:
1. Disallowance of employees' contribution towards PF & ESI. 2. Condonation of delay in filing the appeal. 3. Disallowance of late fees for delay in filing VAT returns. 4. Disallowance under section 43B of the Act for employer's contribution to PF, ESI, and GST payable. Detailed Analysis: 1. Disallowance of Employees' Contribution towards PF & ESI The common issue in all appeals was whether the assessees are entitled to deduction of employees' contribution towards PF & ESI paid before the due date of filing the return. The Tribunal referenced its decision in the case of Lumino Industries Ltd. vs. ACIT, which held that the amendment brought by Finance Act, 2021, to Section 36(1)(va) is prospective and not retrospective. Therefore, contributions made before the due date of filing the return are allowable as deductions. The Tribunal allowed the appeals of the assessees on this ground, holding that the disallowance made by the Assessing Officer was incorrect. 2. Condonation of Delay in Filing the Appeal The appeal in ITA No. 44/KOL/2022 was time-barred by 27 days. The delay was condoned based on an affidavit citing the COVID-19 pandemic and the relaxation given in the limitation period by the Hon'ble Supreme Court. The appeal was admitted on merit. 3. Disallowance of Late Fees for Delay in Filing VAT Returns In the case of Rajiv Sarkar (ITA No. 15/KOL/2022), Ground No. 5 pertained to the disallowance of late fees of ?36,300/- paid for delay in filing VAT returns. The assessee did not press this ground due to the smallness of the amount, and it was dismissed as not pressed. 4. Disallowance under Section 43B of the Act for Employer's Contribution to PF, ESI, and GST Payable In the case of Prakash Road Lines Corporation Limited (ITA No. 24/KOL/2022), Ground No. 4 related to the disallowance under section 43B for employer's contribution to PF, ESI, and GST payable, totaling ?65,55,885/-. The assessee argued that there was an error in the original audit report, and the amounts were actually deposited before the due date of filing the return. The Tribunal restored the issue to the Assessing Officer to verify the documents and determine if the amounts were deposited on time. If satisfied, the disallowance would be uncalled for. Conclusion: - The appeals in ITA Nos. 52 & 44/KOL/2022 were allowed. - ITA No. 15/KOL/2022 was partly allowed. - ITA No. 24/KOL/2022 was partly allowed for statistical purposes. The judgment emphasized that the amendment to Section 36(1)(va) by Finance Act, 2021, is prospective and not applicable to the assessment years in question. The Tribunal directed the Assessing Officer to allow deductions for contributions made before the due date of filing returns and to verify the correctness of the audit reports where discrepancies were noted.
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