Appeal allowed for PF & ESI deductions made before return filing due date

The Tribunal allowed the appeal, directing the Assessing Officer to permit the deduction for Employees' Contribution to PF & ESI made before the due date of filing the return under section 139(1). The Tribunal held that the amended provisions should apply prospectively from the assessment year 2021-2022, in line with previous decisions allowing delayed payment of contributions as deductions. The order was pronounced on 27/04/2022, overturning the disallowance made under section 36(1)(va) for the Contributions to PF & ESI.

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Issues Involved:
Disallowance made u/s. 36(1)(va) in respect of Contribution made to PF & ESI.

Analysis:
1. The appeal was filed against the order of the Ld. Commissioner of Income Tax (Appeals) regarding the disallowance made u/s. 36(1)(va) in respect of Contribution made to PF & ESI. The notice was returned un-served as the firm was not found at the given address. The appeal was disposed of after hearing the Ld. DR on merits.

2. The Central Processing Centre disallowed Employees Contribution to PF & ESI, which was confirmed by the Ld. CIT(A) due to the insertion of Explanation 2 and Explanation 4 in the provisions of section 36(1)(va) and 43B respectively w.e.f. 01.04.2021 by the Finance Act, 2021.

3. The issue was found to be covered by a previous Tribunal decision where it was held that delayed payment of contribution to PF and ESI is allowable as a deduction under section 43B r.w.s. 36(1)(va) if paid before the due date of return of income prescribed under section 139(1) of the Act. The Tribunal held that the amended provisions should apply prospectively w.e.f. assessment year 2021-2022.

4. A similar view was taken by the Tribunal in a batch of appeals, holding that Employees Contribution towards PF & ESI made before the due date of filing the return u/s. 139(1) should be allowed as a deduction. Consequently, the appeal of the assessee was allowed.

5. The order was pronounced in the open court on 27/04/2022, directing the Assessing Officer to allow the deduction for the Employees Contribution towards PF & ESI made before the due date of filing the return u/s. 139(1).

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision on the disallowance made in respect of Contribution to PF & ESI under section 36(1)(va).

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