Employee PF and ESI contributions paid before return-filing due date remain deductible; pre-2021 amendment law applies prospectively.

Employee's contribution to PF and ESI paid after the welfare enactment due date but before the return-filing due date was held allowable under section 43B. The Tribunal followed its earlier view that, for the pre-amendment period, such contributions were not liable to disallowance if remitted before the due date under section 139(1). It further noted that the Finance Act, 2021 amendments inserting Explanation 2 to section 36(1)(va) and Explanation 5 to section 43B operate prospectively from 01.04.2021. On that basis, the addition for belated remittance was deleted and the assessee's claim was accepted.

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Issues: Whether the employees' contribution to PF and ESI, remitted after the due date under the respective welfare enactments but before the due date for filing the return of income, was liable to disallowance.

Analysis: The Tribunal followed its earlier decision holding that employee contributions paid before the due date under section 139(1) of the Income-tax Act, 1961 remain allowable under section 43B, and that the amendment introduced by the Finance Act, 2021 in the form of Explanation 2 to section 36(1)(va) and Explanation 5 to section 43B applies only prospectively from 01.04.2021. On that reasoning, the pre-amendment position governed the assessment year in question, and no disallowance could be sustained for contributions paid before the return-filing due date.

Conclusion: The addition made towards belated remittance of employees' share of PF and ESI was deleted, and the assessee's claim was accepted.

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