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2022 (7) TMI 1206 - AT - Income TaxAddition u/s 36(1)(va) on a/c of delayed payment of PF ESI - delayed deposit of employees contribution to PF and ESIC on the ground that the same were deposited beyond the due date prescribed in the said Act - HELD THAT - We find the co-ordinate benches of the Tribunal are now consistently taking the view that no disallowance u/s. 36(1)(va) r.w.s. 2(24)(x) can be made on account of delayed payment of PF and ESIC, if such payments are made before the due date of filing of the return. It has further been held in these decisions that the amendment to section 43B as well as section 36(1)(va) r.w.s. 2(24)(x) by the Finance Act, 2021 are prospective and not retrospective in nature. Since, the assessee in instant case has admittedly paid the employees contribution to PF and ESIC before the due date of filing of the return, therefore, we set aside the order of the CIT (A)/NFAC and direct the AO to delete the addition. The grounds raised by the assessee are accordingly allowed.
Issues:
1. Delay in filing appeal for condonation. 2. Addition of Rs.30,53,317 under section 36 of the I.T. Act for delayed payment of PF & ESI. 3. Interpretation of amendments in section 36(1)(va) and section 43B by Finance Act, 2021. Issue 1 - Delay in filing appeal for condonation: The appeal was filed by the assessee against the order of the CIT (A)-NFAC relating to A.Y. 2019-20. The delay of 147 days in filing the appeal was attributed to the pandemic situation. The assessee submitted a condonation application with an affidavit explaining the reasons for the delay. After considering the application and hearing the learned DR, the delay was condoned, and the appeal was admitted for adjudication. Issue 2 - Addition of Rs.30,53,317 under section 36 of the I.T. Act for delayed payment of PF & ESI: The assessee's appeal primarily contested the addition of Rs.30,53,317 made by the Assessing Officer under section 36 of the I.T. Act due to delayed payment of PF & ESI. The CIT (A) NFAC sustained this addition, emphasizing that the Finance Act of 2021 had amended the provisions of section 36(1)(va) and section 43B, clarifying that the payments were not made before the statutory due date. The Tribunal, however, noted that the assessee had paid the employees' contribution to PF and ESIC before the due date of filing the return. Citing consistent views of co-ordinate benches, the Tribunal set aside the CIT (A)/NFAC's order and directed the AO to delete the addition. Issue 3 - Interpretation of amendments in section 36(1)(va) and section 43B by Finance Act, 2021: The learned Counsel for the assessee argued that previous decisions by the Tribunal supported the view that no disallowance should be made under section 36(1)(va) for delayed PF and ESIC payments if made before the due date of filing the return. On the other hand, the learned DR relied on the Finance Act, 2021 amendments, contending that the legislative intent was clear that employees' contribution is not covered under section 43B. The Tribunal, after hearing both sides and reviewing relevant decisions, concluded that the amendments were prospective and not retrospective. As the assessee had made the payments before the due date of filing the return, the Tribunal allowed the appeal and directed the deletion of the addition. In conclusion, the Tribunal allowed the appeal filed by the assessee, emphasizing that the delayed payment of PF and ESIC before the due date of filing the return did not warrant the addition under section 36 of the I.T. Act.
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