Tribunal: No Disallowance for Belated ESI & PF Contributions if Paid Before Tax Return Due Date

The Tribunal allowed the appeal, holding that no disallowance is justified for belated ESI and PF contributions if paid before the due date of filing the Income Tax Return, citing relevant judgments and the Finance Act, 2021 amendments clarifying the non-application of Section 43B to employee contributions under Section 36(1)(va).

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Issues Involved:
1. Payment of ESI & PF

Issue-wise Detailed Analysis:

Payment of ESI & PF:

The primary issue in this case revolves around the payment of Employees' State Insurance (ESI) and Provident Fund (PF) contributions by the assessee before the due date of filing the income tax return under Section 139(1) of the Income Tax Act, 1961.

Facts and Tribunal's Previous Rulings:
The fact that the payment was made before the filing of the return is not in dispute, and the details of payments have been duly recorded. The issue has been previously adjudicated by various benches of the Tribunal, which have consistently held that the employee's contribution to PF and ESI, if paid before the due date of filing the Income Tax Return under Section 139(1), is an allowable deduction and no disallowance can be made.

Relevant Judgments and Tribunal Orders:
Several orders from different ITAT benches and High Courts were cited, including:
- ITAT Hyderabad in Crescent Roadways Pvt. Ltd. vs. DCIT
- ITAT Delhi in DCIT vs. Dee Development Engineers Ltd.
- ITAT Chennai in DCIT vs. Talenpro India HR Pvt. Ltd.
- ITAT Agra in Mahadev Cold Storage vs. Jurisdiction Assessing Officer
- ITAT Delhi in Eagle Trans Shipping & Logistics (India) (P.) Ltd. vs. ACIT
- ITAT Delhi in Vedvan Consultants Pvt. Ltd. vs. DCIT

High Court Judgments:
- Madras High Court (Unifac Management Services (India) Pvt. Ltd. vs. DCIT): Held that Section 43B and Section 36(1)(va) are distinct and should not be read together for considering deductions for belated contributions.
- Kerala High Court (CIT vs. Merchem Limited): Emphasized that for employee contributions, the due date is as per Section 36(1)(va) and not Section 43B.
- Bombay High Court (CIT vs. Ghatge Patil Transports Ltd.): Allowed deductions for contributions paid before the due date under Section 43B.

Gujarat High Court Judgment:
- State Road Transport Corporation: Held that contributions not credited by the due date as per Section 36(1)(va) are not deductible, even if paid before the due date under Section 43B.

Delhi High Court Judgment:
- CIT vs. Bharat Hotels Ltd.: Clarified that deductions for employee contributions paid beyond the stipulated period are not allowable.

Allahabad High Court Judgment:
- Sagun Foundry Pvt. Ltd. vs. CIT: Allowed deductions for contributions paid before the due date of filing the return, considering the judgment in Vinay Cement Ltd.

Supreme Court Judgment:
- CIT vs. Vinay Cement Ltd.: Held that contributions paid before the due date of filing the return are deductible.

Finance Act, 2021 Amendments:
The Finance Act, 2021, introduced amendments clarifying that Section 43B does not apply to employee contributions under Section 36(1)(va), effective from April 1, 2021.

Tribunal's Conclusion:
After considering the various judgments, amendments, and legal provisions, the Tribunal held that no disallowance is warranted for the belated payment of employee contributions to ESI and PF if deposited before the due date of filing the Income Tax Return.

Order:
The appeal of the assessee was allowed, and the order was pronounced in the open court on June 27, 2022.

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