2022 (4) TMI 609 - AT - Income Tax

Deduction of employees contribution paid before the due date of filling of the return - HELD THAT - As relying on LUMINO INDUSTRIES LTD. 2021 (11) TMI 926 - ITAT KOLKATA if employees contribution received by an assessee and paid to ESI and PF accounts before the due date of filing of the return, then the assessee will be eligible to claim the deduction of such amounts. With the assistance of ld. representatives, we have specifically gone through the record and find that payments have been made within the due dates of filing of the return. With the above observation, these appeals of the assessee are treated as allowed. The disallowance stand deleted in all the appeals. - Decided in favour of assessee.

Summary

Issues Involved:
Whether assessees are entitled to deduction of employees' contribution paid before the due date of filing of the return.

Analysis:

Issue 1: Entitlement to deduction of employees' contribution

The appeals were filed against orders disallowing the claim of assessee for deduction of employees' contribution to ESI & PF accounts. The Assessing Officer disallowed the claim under section 36(1)(va) read with section 2(24)(x) of the Income Tax Act. The contention was that the issue is covered by judgments of the Calcutta High Court and other cases. The Revenue argued that amendments by the Finance Act, 2021, disallow such deductions. However, the ITAT Kolkata analyzed the amendment and previous judgments. The ITAT noted that if the employees' contribution is paid before the due date of filing the return, the deduction is allowable. The ITAT emphasized that the legislative intent was prospective, not retrospective, based on the Finance Act, 2021. Therefore, the appeals were allowed, and disallowances were deleted.

Conclusion:
The ITAT Kolkata ruled that if employees' contributions are paid before the due date of filing the return, assessees are entitled to claim deductions. The amendment by the Finance Act, 2021, was seen as prospective, supporting the assessees' position. Thus, the appeals were allowed, and the disallowances were overturned.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the reasoning behind the decision rendered by the ITAT Kolkata.