2022 (6) TMI 113 - AT - Income Tax

Payment of employees' contribution to ESI PF - assessee failed to make the payment of employees' contribution to ESI PF account within the due date provided under the PF ESI Act - HELD THAT - As decided in 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 - 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 - Decided in favour of assessee.

Summary

Issues:
Disallowance of employees' contribution to ESI & PF account under section 36(1)(va) for failure to make payment within due date.

Analysis:
The appeal was filed against the order of the ld. Commissioner of Income Tax (Appeals) concerning the disallowance of Rs. 73,59,375/- for failure to make timely payments of employees' contribution to ESI & PF account. The counsel for the assessee argued that the issue is covered by judgments of the Jurisdictional High Court and cited relevant cases. The Coordinate Bench previously considered a similar issue in the case of Lumino Industries Ltd. The discussion revolved around the amendment brought by the Finance Act, 2021, which impacted sections 36(1) and 43B. The Tribunal analyzed the retrospective or prospective nature of the amendment in light of legislative intent and relevant legal precedents.

The Tribunal referred to its previous order where it discussed the impact of the Finance Act, 2021 amendment on the deduction of employees' contribution to ESI & PF accounts. It emphasized that if the contributions were received and paid before the due date of filing the return, the assessee could claim the deduction. Upon reviewing the records and confirming timely payments, the appeals of the assessee were allowed, and the disallowances were deleted. The current appeal was allowed based on the decision of the Coordinate Bench, leading to the deletion of the disallowance.

In conclusion, the appeal of the assessee was allowed, and the disallowance of employees' contribution to ESI & PF accounts under section 36(1)(va) was deleted. The Tribunal's decision was in line with the previous rulings and the interpretation of the Finance Act, 2021 amendment.