Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (4) TMI 720 - AT - Income TaxAddition in respect of employees contribution towards EPF - Deposits before due date of filing of return of income u/s 139(1) - HELD THAT - As decided in MOHANGARH ENGINEERS AND CONSTRUCTION COMPANY 2021 (8) TMI 563 - ITAT JODHPUR where the PF and ESI dues are paid after the due date under the respective statues but before filing of the return of income u/s 139(1), the same cannot be disallowed under section 43B read with section 36(1)(va) of the Act. In the instant case, admittedly and undisputedly, the employees contribution to EPF 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. Further, the ld 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. Thus addition by way of adjustment while processing the return of income u/s 143(1) so made by the CPC towards the delayed deposit of the employees s contribution towards ESI and PF though paid well before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted as the same cannot be disallowed under section 43B read with section 36(1)(va) - Decided in favour of assessee.
Issues Involved:
1. Confirmation of addition in respect of employees' contribution towards EPF pertaining to assessment year 2019-20. 2. Applicability of Section 36(1)(va) and Section 43B of the Income Tax Act, 1961. 3. Retrospective applicability of the amendment introduced by the Finance Act, 2021. Issue-wise Detailed Analysis: 1. Confirmation of Addition in Respect of Employees' Contribution Towards EPF: The assessee filed its return of income declaring a total income of ?49,72,054 for the assessment year 2019-20. The Assessing Officer added ?8,43,654 due to the delayed payment of EPF. The assessee's rectification application was rejected, and the CIT(A) confirmed the disallowance based on the failure to pay the employee’s contribution within the prescribed due dates as per Section 36(1)(va). The assessee appealed against this order. 2. Applicability of Section 36(1)(va) and Section 43B of the Income Tax Act, 1961: During the hearing, the assessee argued that the EPF contributions were deposited before the due date of filing the return under Section 139(1), citing various tribunal decisions and High Court rulings supporting this view. The Revenue countered that the contributions were not made within the prescribed due dates under Section 36(1)(va), justifying the disallowance under Section 143(1)(a)(iv) as a prima facie adjustment. The Revenue also cited the Finance Act, 2021 amendment to Section 36(1)(va) to support their position. 3. Retrospective Applicability of the Amendment Introduced by the Finance Act, 2021: The Tribunal noted that the employees’ contributions were deposited before the due date for filing the return under Section 139(1). It referred to the Rajasthan High Court's consistent rulings that contributions paid before the filing deadline could not be disallowed under Section 43B read with Section 36(1)(va). The Tribunal emphasized that the Finance Act, 2021 amendment clearly stated its applicability from 1st April 2021, and thus could not be applied retrospectively to the assessment year 2019-20. Conclusion: The Tribunal concluded that the addition made by the CPC for delayed EPF contributions, which were paid before the return filing due date, should be deleted. The Tribunal directed the deletion of the ?8,43,654 addition, aligning with the binding decisions of the Rajasthan High Court and consistent tribunal rulings. Order: The appeal of the assessee was allowed, and the order was pronounced in the open Court on 04/04/2022.
|