The Allahabad Bench of Income Tax Appellate Tribunal ( ITAT ), has held that the belated payment of employee contribution to PF/ESI deposited before the due date for filing the return of income is deductible u/s 43B.
The appellant, M/s. SBW Udyog Limited filed its return of income u/s. declaring a total income of Rs. 15,48,69,400/-.An additional amount of Rs.6,24,281/- was added to the income of the assessee on the grounds that the assessee has not deposited the employee share of PF/ESI collected/deducted by the assessee from the salaries of employees, to the credit of said employees maintained with relevant fund concerning PF/ESI within the time prescribed under the relevant statute concerning PF/ESI. The filed first appellate authority dismissed the appeal, the aggrieved assessee filed an appeal before ITAT.
The counsel for the appellant submitted that the employee share of PF/ESI which is collected by employer is to be allowed as deduction u/s 36(1)(va) of the 1961Act despite the same is deposited to the credit of employee with relevant fund concerning PF/ESI beyond the due date prescribed for depositing the said amount under the relevant statute concerning PF/ESI, provided the same is deposited before the due date of filing of return of income u/s 139(1) of the 1961 Act.
The counsel for the appellate further submitted that the Finance Act, 2021 made amendment in provision of Section 36(1)(va) and 43B of the 1961 Act, but the Memorandum to Finance Bill, 2021 clearly stipulates that said amendments are applicable from AY 2021-22 and onwards and hence the same is to be prospectively applied.
The Tribunal observed that the Jurisdictional High Court in the case of Sagun Foundry Private Limited has held that deduction is to be allowed for belated payment of employee contribution to PF/ESI which is deposited beyond the due date stipulated under the relevant statutes governing PF/ESI, but the same stood deposited before the due date for filing of return of income as is prescribed u/s 139(1) of the 1961 Act.
The bench presided by Mr. Vijay Pal Rao, Judicial Member, and Mr. RamitKochar, Accountant Memberwhile allowing the appeal, has held that “we are directing AO to verify the challans evidencing the deposit of aforesaid employee share of PF/ESI and that it was deposited before the due date prescribed for filing of return of income u/s 139(1), before allowing the claim of deduction u/s 36(1)(va) of the 1961 Act”.
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