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2022 (9) TMI 1034 - AT - Income TaxDisallowance of expenditure in respect of employees contribution to Provident Fund and Employee State Insurance ((ESI) - Addition u/s 36(1)(va) - amount paid before the due date of filing return of income and is thereby allowable u/s 43B - HELD THAT - As decided in GHATGE PATIL TRANSPORTS LTD. 2014 (10) TMI 402 - BOMBAY HIGH COURT the payment of employee s contribution beyond the due date mentioned in the relevant statute but before the due date of filling the return of income u/s 139(1) is allowable expenditure. - Decided in favour of assessee.
Issues Involved:
1. Disallowance of expenditure in respect of employees' contribution to Provident Fund (PF) and Employee State Insurance (ESI) under section 36(1)(va) of the Income-tax Act, 1961. Issue-wise Detailed Analysis: 1. Disallowance of Expenditure in Respect of Employees' Contribution to Provident Fund and Employee State Insurance: The primary issue in these appeals is the disallowance of employees' contribution to PF and ESI under section 36(1)(va) of the Income-tax Act, 1961. The appellants argued that the contributions were made before the due date of filing the return of income under section 139(1) of the Act, and hence, should be allowed as deductions per section 43B of the Act. The Tribunal noted that the facts and circumstances of all the appeals were identical. The appellants cited various decisions from the Pune Tribunal and Hon'ble Jurisdictional Bombay High Court, which held that if the employees' contribution to PF is paid before the due date of filing the return of income, it is deductible under section 43B of the Act. The Tribunal referenced the amendment introduced by the Finance Act, 2021, inserting Explanation 2 to section 43B, which applies prospectively from Assessment Year (AY) 2021-22. The Tribunal found the issue to be squarely covered by previous decisions, including the case of Prashant Arun Sangai vs. ADIT, CPC, Bengaluru (ITA No. 466/PUN/2021 for AY 2019-20) and SIP Moulds Pvt. Ltd. vs. ITO Ward 2(1) Nashik (ITA No. 551/PUN/2021 for AY 2019-20). In these cases, the Tribunal held that contributions paid before the due date of filing the return of income should be allowed as deductions. The Tribunal also cited the Hon'ble Himachal Pradesh High Court's decision in CIT vs. Nipso Polyfabriks Ltd. (2013) 350 ITR 327 (HP), which established that both employees' and employers' contributions should be allowed as deductions if deposited before the due date. The Tribunal also referenced the Hon'ble Jurisdictional Bombay High Court's decision in CIT vs. Ghatge Patil Transports Ltd. 368 ITR 749 (Bom.), which supported the same view. The Tribunal emphasized that the Finance Act, 2021 amendment is applicable from AY 2021-22 onwards and does not affect the assessment years under consideration (AY 2018-19 and AY 2019-20). Based on these judicial precedents, the Tribunal held that the disallowance under section 36(1)(va) was not warranted since the contributions were deposited before the due date under section 139(1) of the Act. Consequently, the Tribunal directed the Assessing Officer to delete the additions made under section 36(1)(va) for all the appellants. Conclusion:In conclusion, the Tribunal allowed the appeals filed by the assessees, directing the deletion of the additions made under section 36(1)(va) of the Act, as the contributions to PF and ESI were made before the due date for filing the return of income. Order Pronouncement:Order pronounced in the open Court on 20th September 2022.
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