2022 (5) TMI 270 - AT - Income Tax

Delayed payments of employees contribution to ESI and PF invoking the provisions of section 36(1)(va) - addition on the basis of the amendment effected by the Finance Act, 2021, to section 43B of the Act by insertion of Explanation-5 and to section 36(1)(va) of the Act by insertion of Explanation-2 - HELD THAT - In view of the aforestated decisions of the Ajay Piplani 2021 (10) TMI 1280 - ITAT And M/S JUPITER AQUA LINES PVT. LTD. 2021 (11) TMI 761 - ITAT CHANDIGARH therefore the contention of the Ld. DR before us that the amendment to section 36(1)(va) of the Act is retrospective is dismissed. Also since no facts distinguishing the present cases from those decided by the ITAT have been pointed out by the Ld. DR before us and admittedly the amounts of employees' contribution to ESI and PF stood paid before the due date of filing of return of income, the issue of disallowance on account of delayed payments of employees' contribution to ESI and PF is squarely covered by the aforesaid decisions, following which the disallowance made of ESI/PF employees' contribution u/s. 36(1)(va) is deleted. - Decided in favour of assessee.

Summary

Issues:
Delay in filing appeal before the Tribunal, Condonation of delay, Addition made to the income of the assessee regarding delayed payments of employees' contribution to ESI and PF.

Delay in filing appeal before the Tribunal:
The appeal was filed with a delay of 11 days, and the assessee submitted an application for condonation of delay due to the concerned person in the office of their Chartered Accountant suffering from suspected Covid. The delay was considered unintentional, and the delay was condoned after hearing the rival contentions.

Addition made to the income of the assessee regarding delayed payments of employees' contribution to ESI and PF:
The issue revolved around the disallowance of delayed payments of employees' contribution to ESI and PF amounting to Rs. 407,240 under section 36(1)(va) of the Income Tax Act, 1961. The Commissioner of I. Tax(A) upheld the addition based on the Finance Act, 2021 amendments to sections 43B and 36(1)(va), considering them retrospective and clarificatory. However, the ITAT consistently ruled in favor of the assessee in similar cases, holding the amendments as prospective. The ITAT cited various decisions where contributions paid by the due date of filing the return of income were considered allowable. The ITAT dismissed the argument that the amendment was retrospective, as the contributions were paid before the due date of filing the return of income. Consequently, the disallowance of employees' contribution to ESI and PF was deleted, and the appeal of the assessee was allowed.

This judgment showcases the importance of timely filing of appeals and the interpretation of tax laws, specifically regarding the deduction of employees' contribution to ESI and PF. The decision highlights the significance of legal precedents and consistency in judicial interpretations to ensure fair treatment of taxpayers.