Tribunal rules in favor of appellant, deleting additions for delay in remittance of employees' provident fund and ESI contributions.

The tribunal ruled in favor of the appellant, deleting the additions for delay in remittance of employees' provident fund and ESI contributions. The tribunal considered legislative amendments effective from 1.4.2021 and the CBDT's clarification, determining that the additions were unsustainable due to the distinction between employers' and employees' contributions. As a result, the total disallowance of ESI/PF amount was also deleted, and the appellant's appeal was allowed.

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Issues:
1. Addition of delay in remittance of employees' contribution towards provident fund.
2. Addition of delay in remittance of employees' contribution towards ESI.
3. Disallowance of ESI/PF amount.

Analysis:
1. The appellant challenged the addition of Rs. 2,83,203 for delay in remittance of employees' provident fund contribution. The CIT(A) confirmed this addition. The tribunal noted that the legislative amendments in Sections 36(1)(va) and 43B, effective from 1.4.2021, addressed this issue. The CBDT clarified the application of these amendments. As the amendments focused on employers' contribution under section 43B, not employees' contribution under section 36(va), the tribunal held the impugned addition unsustainable based on the latest developments. Consequently, the addition for provident fund delay was deleted.

2. The appellant contested the addition of Rs. 44,129 for delay in remitting employees' ESI contribution. The CIT(A) upheld this addition. The tribunal considered the legislative changes and the CBDT's clarification. Given the prospective effect of the amendments from 1.4.2021 and the distinction between employers' and employees' contributions, the tribunal concluded that the disallowance was not justified. Therefore, the addition for ESI delay was also deleted.

3. Addressing the sole substantive issue of ESI/PF disallowance totaling Rs. 3,27,332, the tribunal highlighted the legislative amendments' impact and the CBDT's explanation. Emphasizing the prospective application of the changes from 1.4.2021 and the distinction between employers' and employees' contributions, the tribunal ruled in favor of the appellant. Consequently, the impugned ESI/PF disallowance was deleted, and the appellant's appeal was allowed. The order was pronounced in open court on 01/07/2021.

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