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2022 (2) TMI 324 - AT - Income TaxDelay payment of ESIC and PF - payment has been made on or before the due date of filing income tax return - Scope of amendment to section 36(1)(va) and section 43B - HELD THAT - In the instant case, admittedly and undisputedly, the employees contribution to ESI and PF collected by the assessee from its employees have been deposited well before the due date of filing of return of income u/s 139(1) of the Act. D/R has referred to the explanation to section 36(1)(va) and section 43B by the Finance Act, 2021 and has also referred to the rationale of the amendment as explained by the Memorandum in the Finance Bill, 2021, however, we find that there are express wordings in the said memorandum which says these amendments will take effect from 1st April, 2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years . In the instant case, the impugned assessment year is assessment year 2019-20 and therefore, the said amended provisions cannot be applied in the instant case - See SHRI GOPALAKRISHNA ASWINI KUMAR VERSUS THE ASSISTANT DIRECTOR OF INCOME TAX, BENGALURU 2021 (10) TMI 952 - ITAT BANGALORE Thus addition of deposit of the employees s contribution towards ESI and PF though paid before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted. - Decided in favour of assessee.
Issues Involved:
1. Disallowance of ?2,38,852 on account of delayed payment of ESIC and PF. 2. Condonation of delay in filing the appeal. Detailed Analysis: 1. Disallowance of ?2,38,852 on Account of Delayed Payment of ESIC and PF: The core issue revolves around the disallowance of ?2,38,852 due to the delayed payment of employees' contributions towards ESIC and PF. The assessee filed its return of income on 24.06.2020, declaring a total income of ?2,03,85,557, which was processed under Section 143(1) of the Income Tax Act, 1961. The Centralized Processing Centre (CPC) made a disallowance of ?2,38,852 towards employees' contribution to ESIC and PF, citing that the payment was not made within the prescribed due dates as per Section 36(1)(va) of the Act. The CIT(A), NFAC confirmed this disallowance. During the hearing, the assessee argued that although there was a delay in depositing the contributions as per the respective Acts, the payments were made well before the due date of filing the return of income. The assessee cited various judicial precedents, including decisions from the Hon’ble Rajasthan High Court and the ITAT Jodhpur and Bangalore Benches, which supported the view that contributions paid before the due date of filing the return should not be disallowed. The Revenue, on the other hand, contended that the amendment to Section 36(1)(va) by the Finance Act, 2021, clarified that employees' contributions must be paid within the due dates specified in the respective Acts, and this amendment was declaratory and clarificatory in nature, thereby applicable retrospectively. The Tribunal, after hearing both sides and reviewing the material on record, referred to the consistent decisions of the Hon’ble Rajasthan High Court, which held that contributions paid before the due date of filing the return of income under Section 139(1) should not be disallowed. The Tribunal also noted that the amendment introduced by the Finance Act, 2021, was applicable from 1st April 2021 and not to the assessment year in question (2019-20). Therefore, the Tribunal directed the deletion of the disallowance of ?2,38,852. 2. Condonation of Delay in Filing the Appeal: The appeal involved a delay of 19 days in filing. The assessee explained that the delay was due to technical glitches in online filing, necessitating a manual submission. The Revenue did not object to the request for condonation of the delay. The Tribunal, considering the reasons as bona fide, condoned the delay. Conclusion: The Tribunal allowed the appeal, directing the deletion of the disallowance of ?2,38,852 towards the employees' contribution to ESIC and PF, acknowledging that the payments were made before the due date of filing the return of income under Section 139(1). The Tribunal also condoned the delay in filing the appeal, considering the reasons provided by the assessee as bona fide. The consolidated order applied to all related appeals, resulting in their allowance as well.
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