Tribunal rules amendments are prospective, disallowance of late PF/ESI contributions unsustainable. Appeals successful. The Tribunal held that the amendments to Section 36(1)(va) and Section 43B by the Finance Act, 2021, are prospective. The disallowance of employees' ...
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Tribunal rules amendments are prospective, disallowance of late PF/ESI contributions unsustainable. Appeals successful.
The Tribunal held that the amendments to Section 36(1)(va) and Section 43B by the Finance Act, 2021, are prospective. The disallowance of employees' contributions to PF and ESI deposited after the due date specified under the Acts but before the due date for filing the return of income was deemed unsustainable. The Tribunal directed the deletion of the disallowance and allowed the appeals of the assessee. The order was pronounced on 12th January 2022, with the appeals of the assessee being successful.
Issues Involved: 1. Whether the addition of employees' contribution towards Provident Fund (PF) and Employee State Insurance (ESI) deposited after the due date specified under the respective Acts but before the filing of the return of income is justified.
Issue-wise Detailed Analysis:
1. Addition of Employees' Contribution to PF and ESI:
Arguments Presented: - The assessee argued that the employees' contributions to PF and ESI were deposited after the due date specified under the respective Acts but before the due date for filing the return of income. This argument was supported by various orders of the Chandigarh Bench of the ITAT. - The Revenue, represented by the ld. Sr. DR, relied on the impugned order but did not provide any contrary view.
Tribunal's Observations: - The Tribunal noted that the employees' contributions were indeed deposited after the due date specified under the respective Acts but before the due date for filing the return of income. - The First Appellate Authority (CIT(A)) had rejected the assessee's claim, considering the amendments made by the Finance Act, 2021, as clarificatory and retrospective in nature.
Key Rulings from Coordinate Benches: - The Tribunal cited consistent rulings from various ITAT Benches, which held that the amendments made by the Finance Act, 2021, are prospective and not retrospective. Notable cases include: - Insta Exhibitions Pvt. Ltd. Vs Addl. CIT, New Delhi (ITA No. 6941/Del/2017) - M/s. Crescent Roadways Pvt. Ltd. V Dy. CIT, Hyderabad (ITA No. 1952/Hyd./2018) - Shri Sukhdev Singh, Mohali Vs ITO, Chandigarh (ITA 250/CHD/2021)
Conclusion: - The Tribunal concluded that the amendments to Section 36(1)(va) and Section 43B by the Finance Act, 2021, are prospective, as clarified in the Notes on Clauses appended to the Finance Bill. - The disallowance of the employees' contribution deposited after the due date specified under the respective Acts but before the due date for filing the return of income is not sustainable. - The Tribunal directed the deletion of the impugned disallowance and allowed the appeals of the assessee.
Order Pronounced: - The order was pronounced on 12th January 2022, and the appeals of the assessee were allowed. The disallowance of the employees' contribution to PF and ESI was directed to be deleted.
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