Employees' provident fund and ESI contributions paid before return filing deadline were allowed; the 2021 amendment was held prospective.

For assessment years before the Finance Act, 2021 amendment took effect, employees' contribution to provident fund and ESI was treated as allowable if deposited before the due date for filing the return under section 139(1), even where payment was made after the welfare-law due date. Following jurisdictional High Court and coordinate Bench authority, the Tribunal treated the 2021 amendment to section 36(1)(va) and section 43B as prospective. On that basis, the disallowance sustained in first appeal was not justified when the contributions had been paid before the return-filing deadline, and the addition was deleted.

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Issues: Whether employees' contribution to provident fund and ESI, deposited before the due date for filing the return of income but after the statutory due date under the relevant welfare enactments, could be disallowed under section 36(1)(va) of the Income-tax Act, 1961 for the assessment year in question.

Analysis: The Tribunal applied the settled line of authority holding that, for assessment years prior to the effective operation of the Finance Act, 2021 amendment, the decisive consideration is whether the employees' contribution was paid before the due date for filing the return under section 139(1). It followed the jurisdictional High Court and coordinate Bench decisions, and treated the Finance Act, 2021 amendment to section 36(1)(va) and section 43B as prospective in operation. On that basis, the disallowance sustained by the first appellate authority was not justified where the deposits were made before the return-filing deadline.

Conclusion: The disallowance of employees' contribution to provident fund and ESI was deleted and the assessee succeeded.

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