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2021 (12) TMI 505 - AT - Income TaxDelayed Employees contribution to PF and ESI - Deposit beyond the due date prescribed under relevant Act and deposited within due date by filing the return on u/s 139(1) - HELD THAT - We find no merit in the argument of the ld.DR since the explanation as provided in Finance Act 2021 prescribes that the amendment in both sec.36(va) as well as 43B by inserting corresponding explanation that although impugned PF comes in the form of provision and the same is applicable from 1/4/2021 onwards only. In the present case we are concerned with the asst. year 2017-18 and the amended provision could not be applied retrospectively as it is only applicable w.e.f 1/4/2021. Being so no disallowance could be made by the AO in respect of PF/ESI paid within the due date of filing return of income. Though, it was beyond the date mentioned in the respective Act. This view of ours is supported by various judgment relied on by the ld.AR. Accordingly the appeal of the assessee is allowed.
Issues Involved:
1. Validity of the appellate order passed by the CIT(A). 2. Adherence to binding judicial precedents by the CIT(A). 3. Legitimacy of adjustment under Section 143(1)(a) by CPC. 4. Deductibility of employee's contribution to PF and ESI under Section 36(1)(va) and Section 43B. 5. Applicability of interest under Sections 234A, 234B, and 234C of the Income-tax Act. Issue-wise Detailed Analysis: 1. Validity of the Appellate Order Passed by the CIT(A): The assessee contended that the appellate order passed by the Commissioner of Income-tax (Appeals) - 11 (CIT(A)) was void-ab-initio and bad in law, thus liable to be quashed. The Tribunal examined the procedural aspects and found that the CIT(A) had followed due process in passing the order, thereby rejecting the claim that the order was void. 2. Adherence to Binding Judicial Precedents by the CIT(A): The assessee argued that the CIT(A) dismissed the appeal without following binding decisions of the jurisdictional High Court and the Supreme Court, making the order bad in law. The Tribunal noted that the CIT(A) did not properly consider the precedents, especially the judgments in Essac Teraoka (P.) Ltd. v. Dy. CIT and CIT v. Sabari Enterprises, which supported the assessee’s claim regarding the timing of PF and ESI contributions. 3. Legitimacy of Adjustment Under Section 143(1)(a) by CPC: The assessee challenged the adjustment made by the Centralized Processing Centre (CPC) under Section 143(1)(a) of the Income-tax Act, arguing that the adjustment was beyond the purview of prima facie adjustments. The Tribunal agreed with the assessee, stating that the adjustment of ?3,13,290/- for employees’ contribution to PF and ESI, which was deposited beyond the due date prescribed under the relevant Act but within the due date of filing the return under Section 139(1), should not have been disallowed. 4. Deductibility of Employee's Contribution to PF and ESI Under Section 36(1)(va) and Section 43B: The primary issue was the disallowance of ?3,13,290/- being employees’ contribution to PF and ESI, deposited beyond the due date prescribed under the relevant Act but within the due date for filing the return under Section 139(1). The Tribunal referred to the judgments in Essac Teraoka (P.) Ltd. v. Dy. CIT and CIT v. Sabari Enterprises, which held that contributions made before the due date for filing the return should be allowed as deductions. The Tribunal concluded that the disallowance under Section 36(1)(va) was not justified as the contributions were made within the due date for filing the return under Section 139(1). 5. Applicability of Interest Under Sections 234A, 234B, and 234C: The assessee denied liability to pay interest under Sections 234A, 234B, and 234C, arguing that the interest levied was erroneous. The Tribunal stated that the interest under these sections is mandatory and consequential in nature, thus upholding the interest levied. Conclusion: The Tribunal allowed the appeal of the assessee, concluding that the disallowance of ?3,13,290/- was not justified as the contributions to PF and ESI were made within the due date for filing the return under Section 139(1). The Tribunal also upheld the mandatory nature of interest under Sections 234A, 234B, and 234C. The order was pronounced in the open court on 6th December 2021.
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