2022 (9) TMI 1602 - AT - Income Tax

Allowability of PF and ESIC paid beyond the prescribed date but within the due date of filing of return - HELD THAT - The amendment to section 36(1)(va) by the Finance Act, 2021 is to operate prospectively. In the present case it is noticed that the issue is with regard to allowability of PF and ESIC paid beyond the prescribed date but within the due date of filing of return, therefore, the same is allowable. This issue has also been decided in Odyssey Motors Pvt. Ltd. 2022 (8) TMI 1526 - ITAT CUTTACK in favour of the assessee. This being so, respectful following the principles laid down in the case of TV Today Network Ltd 2022 (8) TMI 361 - DELHI HIGH COURT the addition as made by the AO and confirmed by the CIT(A) stands deleted. Appeal of assessee stands allowed.

Summary

Issues: Appeal against disallowance of PF & ESI paid beyond due date but before filing return for assessment year 2019-2020.

Analysis:
1. The appeal was filed against the CIT(A)'s order confirming the disallowance of PF & ESI paid beyond the due date under the respective Acts but before the due date of filing the return. The assessee argued that the issue was covered by a previous Tribunal decision and the amendment brought by the Finance Act, 2021 was prospective.

2. The respondent contended that the Finance Act, 2021 amendment should be read retrospectively based on Supreme Court precedents. The respondent argued that the amendment was declaratory and retrospective, citing relevant case law and the operative date of the amendment.

3. The Tribunal considered the submissions regarding the retrospective/prospective operation of the Finance Act, 2021 amendment. Referring to a Delhi High Court judgment, it was established that the amendment to section 36(1)(va) was to operate prospectively. Since the issue concerned the allowability of PF and ESIC payments within the due date of filing the return, the Tribunal ruled in favor of the assessee based on a previous Tribunal decision and the principles laid down by the Delhi High Court.

4. The Tribunal concluded that the addition made by the Assessing Officer and confirmed by the CIT(A) was deleted, and the appeal of the assessee was allowed. The decision was based on the settled legal position and precedents cited during the proceedings.

5. Therefore, the Tribunal's order dated 20/09/2022 favored the assessee, emphasizing the allowability of PF and ESI payments made within the due date of filing the return, in line with the principles established by the Delhi High Court and previous Tribunal decisions.