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2022 (1) TMI 1000 - AT - Income TaxDelayed PF/ESI contribution as beyond the due date prescribed for depositing the said amount under - Scope of amendment made by Parliament to Section 36(1)(va) and 43B - HELD THAT - As following decision in the case of Bharat Pumps and Compressors Limited 2021 (10) TMI 496 - ITAT ALLAHABAD we hold that in the instant appeal for ay 2018-19 if the employee share of PF/ESI is deposited by employer to the credit of employee with the relevant fund maintained for PF/ESI before the due date of filing of return of income u/s 139(1) of the 1961 Act, then the assessee shall be entitled for deduction u/s 36(1)(va). The assessee s counsel has filed tax-audit report in which detail/ bifurcations of employee share of PF/ESI along with date of payment is mentioned, but challans are not filed. The said tax-audit report is placed on record in file. Thus for limited purposes , we are directing AO to verify the challans evidencing deposit of aforesaid employee share of PF/ESI and that it was deposited before the due date prescribed for filing of return of income u/s 139(1), before allowing claim of deduction u/s 36(1)(va) of the 1961 Act. The assessee is directed to file before AO complete details/bifurcation of employees share of PF/ESI which was added to income of the assessee u/s 36(1)(va) read with Section 2(24)(x) along with relevant paid challans, for verification. Appeal filed by the assessee is allowed accordingly
Issues Involved:
1. Whether the employee share of PF/ESI deposited beyond the due date prescribed under the relevant statute but before the due date for filing the return of income under Section 139(1) of the Income-tax Act, 1961, is allowable as a deduction under Section 36(1)(va) read with Section 2(24)(x) of the Act. Issue-wise Detailed Analysis: 1. Whether the employee share of PF/ESI deposited beyond the due date prescribed under the relevant statute but before the due date for filing the return of income under Section 139(1) of the Income-tax Act, 1961, is allowable as a deduction under Section 36(1)(va) read with Section 2(24)(x) of the Act: The core issue in this appeal revolves around the disallowance of ?13,14,725/- added to the assessee's income under Section 36(1)(va) read with Section 2(24)(x) of the Income-tax Act, 1961. The assessee had deposited the employee share of PF/ESI beyond the due date prescribed under the relevant statute but before the due date for filing the return of income under Section 139(1) of the Act. The CIT(A) dismissed the appeal, referencing judicial decisions favoring taxpayers, which were negated by the amendment in the statute by the Finance Act, 2021. The assessee argued that the amendment by the Finance Act, 2021, to Sections 36(1)(va) and 43B is prospective and applicable from AY 2021-22 onwards. The assessee relied on various judicial decisions, including the Jaipur Tribunal in Bhiaram Pannalal Kumawat v. DCIT, the Hon'ble Allahabad High Court in Sagun Foundry Private Limited, and decisions of the Hyderabad Tribunal, which held the amendments to be prospective. The Revenue, on the other hand, argued that the amendments are retrospective and relied on the orders of the authorities below. The Revenue emphasized that Section 36(1)(va) mandates the deposit of employees' share of PF/ESI within the due date prescribed under the relevant statute, and the extended time under Section 139(1) is not applicable. The Tribunal considered the rival contentions and referred to the decision of the Division Bench of the Allahabad Tribunal in JCIT(OSD) v. Bharat Pumps and Compressors Limited, which held that if the employee share of PF/ESI is deposited before the due date for filing the return of income under Section 139(1) of the Act, the deduction is allowable under Section 36(1)(va). The Tribunal noted that the Hon'ble Supreme Court in Alom Extrusions Limited held that amendments to Section 43B by the Finance Act, 2003, were retrospective and applicable from 01.04.1988. The Tribunal also referred to various High Court decisions, including the Hon'ble Delhi High Court in CIT v. Aimil Limited and the Hon'ble Bombay High Court in CIT v. Ghatge Patil Transports Limited, which held that the deduction is allowable if the employee share of PF/ESI is deposited before the due date for filing the return of income under Section 139(1) of the Act. The Tribunal concluded that the Hon'ble Jurisdictional High Court in Sagun Foundry Private Limited has decided the issue in favor of the taxpayer, holding that Section 43B is applicable to both employer and employee contributions. Therefore, if the employee share of PF/ESI is deposited before the due date for filing the return of income under Section 139(1) of the Act, the deduction is allowable. The Tribunal directed the AO to verify the challans evidencing the deposit of the employee share of PF/ESI and ensure it was deposited before the due date for filing the return of income under Section 139(1) before allowing the deduction under Section 36(1)(va). Conclusion: The Tribunal allowed the appeal, directing the AO to verify the details and challans of the employee share of PF/ESI deposited before the due date for filing the return of income under Section 139(1) and allow the deduction under Section 36(1)(va) accordingly.
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