Asia Seeds India Private Limited vs. Assistant Commissioner Of Income Tax - (Income Tax Appellate Tribunal) (07 Feb 2022)

Assessee would be entitled to deduction, when Employees' contribution to PF and ESI, is paid before the due date of filing of the return of income under Section 139(1) of the I.T. Act

MANU/IL/0073/2022

Direct Taxation

Present appeals at the instance of the assessee are directed against two orders of the CIT(A). The ground raised in both the appeals is identical, i.e., whether the CIT(A) is justified in disallowing employees' contribution to PF & ESI, which was paid before the due date of filing of the return of income under Section 139(1) of the Income Tax Act, 1961 (I.T. Act).

On identical facts, the Bangalore Bench of the Tribunal in the case of Shakuntala Agarbathi Company Vs. DCIT by following the dictum laid down by the High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT had held that, the assessee would be entitled to deduction of employees' contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income under Section 139(1) of the I.T. Act. It was further held by the ITAT that amendment by Finance Act, 2021, to Section 36[1][va] and 43B of the Act is not clarificatory.

The amended provisions of Section 43B as well as 36(1)(va) of the I.T. Act are not applicable for the assessment years under consideration. By following the binding decision of the Hon'ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT, the employees' contribution paid by the assessee before the due date of filing of return of income under Section 139(1) of the I.T. Act is an allowable deduction. Accordingly, the issue is decided in favour of the assessee and the disallowance made by the Assessing Officer is deleted. Appeals filed by the assessee are allowed.

Tags : DEDUCTION DISALLOWANCE LEGALITY