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2022 (9) TMI 923 - AT - Income TaxDelayed deposit of the employee s share of contributions towards Provident fund (PF) and Employee s State Insurance (ESI) - Scope of amendment - HELD THAT - We find that the issue herein involved is squarely covered by the order passed by the Tribunal in the case of M/s Ind Synergy Limited 2022 (4) TMI 36 - ITAT RAIPUR as held as the employees contributions to PF and ESI was deposited by the assessee before the due date of filing of its return of income for the year under consideration, therefore, the same being saved by the provisions of Sec. 43B of the Act could not have been disallowed by the A.O. The insertion of Explanation-2 to Section 36(1)(va) of the Act as had been made available on the statute vide Finance Act, 2021 would not assist the case of the revenue as the same is applicable w.e.f. 01.04.2021 and, thus, would not be applicable to the case of the assessee before us. Our aforesaid view is fortified by the judgment of the Hon ble High Court of Delhi in the case of Pr. CIT-7 Vs. TV Today Network Ltd. 2022 (8) TMI 361 - DELHI HIGH COURT We, thus, in terms of our aforesaid observations set-aside the order of the CIT(Appeals) and direct the AO to vacate the disallowance made by him u/s.36(1)(va) of the Act qua the delayed deposit of the employees share of contribution of EPF/ESIC. Assessee appeal allowed.
Issues Involved:
1. Legality of the Appellate Order. 2. Disallowance of Rs. 91,150/- under Section 36(1)(va) for delayed deposit of employee contributions to EPF and ESIC. 3. Applicability of Section 43B to employee contributions. 4. Scope of adjustments under Section 143(1)(a). 5. Retrospective application of amendments made by Finance Act, 2021. Issue-wise Detailed Analysis: 1. Legality of the Appellate Order: The assessee contended that the Appellate Order passed by the Commissioner of Income-Tax (Appeals), NFAC, Delhi, was unjustified, erroneous, and not in accordance with the provisions of law. The assessee sought cancellation or setting aside of the Appellate Order under Section 250 of the Income Tax Act, 1961. 2. Disallowance of Rs. 91,150/- under Section 36(1)(va) for delayed deposit of employee contributions to EPF and ESIC: The Centralized Processing Center (CPC) disallowed Rs. 91,150/- for delayed deposit of employee contributions to Provident Fund (PF) and Employee's State Insurance (ESI) beyond the due dates under the respective Acts. The assessee argued that the amount was deposited before the due date of filing the return of income, thus no disallowance should be made under Section 43B of the Act. The assessee cited various judicial precedents to support this claim, including the judgment of the Hon'ble High Court of Delhi in the case of Pr. CIT-7 Vs. TV Today Network Ltd. 3. Applicability of Section 43B to employee contributions: The assessee argued that both employer and employee contributions to PF and ESI are covered under Section 43B of the Act. The Tribunal referred to the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Hindustan Organic Chemicals Ltd and other similar judgments from various High Courts, which held that contributions deposited before the due date of filing the return of income are allowable as deductions under Section 43B. 4. Scope of adjustments under Section 143(1)(a): The assessee contended that the adjustment made by the CPC was beyond the purview of Section 143(1)(a) of the Act, as the issue was highly debatable and contentious. The Tribunal noted that the adjustment made was not within the scope of prima facie adjustments as per Section 143(1)(a). 5. Retrospective application of amendments made by Finance Act, 2021: The Tribunal examined whether the amendments to Section 36(1)(va) and Section 43B made by the Finance Act, 2021, were applicable retrospectively. The Tribunal referred to the order of ITAT, Amritsar in the case of Vinko Auto Industries Ltd. Vs. DCIT, which held that the amendments are applicable prospectively from 01.04.2021. The Tribunal concluded that the amendments would not have any bearing on the case of the assessee for the assessment year 2018-19. Conclusion: The Tribunal set aside the order of the CIT(Appeals) and directed the AO to vacate the disallowance of Rs. 91,150/- made under Section 36(1)(va) of the Act. The Tribunal allowed the appeal of the assessee in terms of the observations made. Ground of appeal No. 5 was dismissed as not pressed. The appeal for the assessment year 2018-19 was allowed.
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