2022 (2) TMI 637 - AT - Income Tax

Disallowing the EPF and ESI contribution received from the employees u/s. 2(24)(x) - Addition u/s. 36(1)(va) read with Section 2(24)(x) - delayed deposit of employees contribution to PF and ESI assessee contributing/depositing the same before the due date of filing of return of income u/s. 139(1) - HELD THAT - As decided in Harendra Nath Biswas 2021 (7) TMI 942 - ITAT KOLKATA we do not accept the Ld. CIT(A)'s stand denying the claim of assessee since assessee delayed the employees contribution of EPF ESI fund and as per the binding decision in Vijayshree Ltd. 2011 (4) TMI 63 - ITAT KOLKATA u/s.36(1)(va) of the Act since assessee had deposited the employees contribution before filing of Return of Income. Appeal of the assessee.

Summary

Issues:
Appeal against order passed by CIT(A) under section 250 of the Income Tax Act - Disallowance of EPF and ESI contribution - Delay in depositing contributions - Applicability of Explanation-5 to section 43B - Interpretation of relevant case laws.

Analysis:
The appeal was filed against the order passed by the CIT(A) under section 250 of the Income Tax Act, challenging the disallowance of EPF and ESI contributions. The assessee contended that the contributions were deposited before the due date of filing the return, citing the decision of the Hon'ble Jurisdictional Calcutta High Court in a specific case. The Tribunal noted that the issue was covered in favor of the assessee for the assessment year 2017-18, as the Explanation-5 inserted by the Finance Act, 2021, was not applicable. The Tribunal referred to a previous case where the AO disallowed contributions despite being deposited before the due date, and the CIT(A) upheld the disallowance based on Explanation-5. However, the Tribunal found that Explanation-5 was not applicable retrospectively to the relevant assessment year, following the precedent set by the Hon'ble Calcutta High Court. The Tribunal emphasized that the law laid down by the High Court would apply, leading to the allowance of the appeal and the deletion of the impugned addition.

The Tribunal disagreed with the CIT(A)'s decision to deny the claim of the assessee due to delayed EPF and ESI contributions, as the contributions were made before filing the return of income. Citing the decision of the Hon'ble Calcutta High Court in a specific case, the Tribunal set aside the CIT(A)'s order and allowed the appeal of the assessee. The impugned addition made by the lower authorities was ordered to be deleted, and the appeal of the assessee was allowed. The Tribunal concluded that the issue was squarely covered in favor of the assessee, leading to the setting aside of the CIT(A)'s order and the allowance of the appeal.

In summary, the Tribunal's decision focused on the timely deposit of EPF and ESI contributions by the assessee before the due date of filing the return. The Tribunal relied on relevant case laws and the non-retrospective applicability of Explanation-5 to support the assessee's claim. By following the precedent set by the Hon'ble Calcutta High Court, the Tribunal allowed the appeal, deleted the impugned addition, and ruled in favor of the assessee.