Appeal allowed for ESI employee contributions pre-due date.

The Tribunal allowed the appeal, directing the AO to grant the deduction for employee contributions to ESI made before the due date of filing the return, citing relevant provisions and judicial precedents. The Tribunal clarified that the amendment to section 36(1)(va) and 43B by the Finance Act, 2021, was prospective from 01.04.2021 onwards, and not applicable for the assessment years in question.

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Issues involved:
1. Disallowance of employee contribution to PF and ESI under section 36(1)(va).
2. Charging of interest under section 234A, B, C.
3. Applicability of amendment to section 36(1)(va) and 43B of the Income Tax Act.

Detailed Analysis:
1. Disallowance of employee contribution to PF and ESI under section 36(1)(va):
The appellant contested the disallowance of Rs. 11,39,506 under section 36(1)(va) for employee contributions to PF and ESI made by the assessing officer (AO). The appellant argued that the contributions were made before the due date of filing the return under section 139(1) of the Income Tax Act. The CIT(A) upheld the disallowance, stating that only the employer's contribution is eligible for deduction under section 43B, not the employee's. However, the Tribunal, citing a previous case and a judgment by the jurisdictional High Court, ruled in favor of the assessee, allowing the deduction for employee contributions made before the due date of filing the return. The Tribunal also clarified that the amendment to section 36(1)(va) and 43B by the Finance Act, 2021, was not clarificatory and had prospective application from 01.04.2021 onwards.

2. Charging of interest under section 234A, B, C:
The appellant denied the liability for interest charged under sections 234A, B, C, contending it was contrary to the law and facts of the case. However, the judgment did not provide specific details on the outcome of this issue, focusing primarily on the disallowance of employee contributions.

3. Applicability of amendment to section 36(1)(va) and 43B of the Income Tax Act:
The Tribunal clarified that the amended provisions of section 43B and 36(1)(va) were not applicable for the assessment years under consideration. Relying on the decision of the jurisdictional High Court, the Tribunal held that employee contributions paid before the due date of filing the return of income were allowable deductions. The Tribunal emphasized that the Finance Act, 2021 amendment was not retrospective and directed the AO to grant the deduction for employees' contributions to ESI made before the due date of filing the return. The judgment highlighted previous Tribunal orders supporting the prospective nature of the amendment.

In conclusion, the Tribunal allowed the appeal filed by the assessee, directing the AO to grant the deduction for employee contributions to ESI made before the due date of filing the return, based on the relevant provisions and judicial precedents.

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