Appeal allowed, disallowance deleted for inconsistency in details, High Court ruling supports pre-due date payments.

The Tribunal allowed the appeal, directing the assessing officer to delete the disallowance amount of Rs.792,353/- for the assessment year 2017-18. The decision was based on the inconsistency in Form 3CD details and the jurisdictional High Court's ruling supporting the assessee's position that payments made before the due date of filing the return should be allowed. The ruling clarified the interpretation of Section 36(1)(va) and emphasized the importance of considering the due date for payment in relation to filing the Income Tax Return for deductions related to employees' contributions.

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Issues:
- Disallowance of employees' contribution to provident fund or superannuation fund
- Interpretation of Section 36(1)(va) of the Income Tax Act
- Applicability of Section 43B and Explanation 2 to Section 36(1)(va)
- Compliance with Form 3CD requirements and audit report discrepancies

Analysis:

1. The appeal was filed against the disallowance of Rs.792,353/- by the National faceless appeal Centre for the assessment year 2017-18. The assessee contended that the adjustment made under Section 143(1)(a)(iv) of the Act was incorrect as the payments were made beyond the due date specified in the respective Acts governing provident fund and ESIC contributions. The assessee argued that these payments should be allowed if made before the due date of filing the Income Tax Return.

2. The Commissioner of Income Tax (Appeals) confirmed the adjustments, citing the provisions of Section 36(1)(va) and judicial precedents supporting the view that employees' contributions become income if not paid before the due date specified in the relevant laws. The Circular No. 22/2015 and amendments introduced by the Finance Act of 2021 were also referenced to justify the disallowance.

3. The Tribunal noted that the adjustment was proposed based on discrepancies in Form 3CD, where delays in depositing employees' contributions were mentioned. However, the Tribunal found that the due date for payment as per the provident fund law was considered by the assessee, not the due date for filing the Income Tax Return. The Tribunal also highlighted that the adjustment proposed by the Central Processing Centre was not in line with the decision of the jurisdictional High Court, which supported the assessee's claim that payments made before the due date of filing the return should be allowed.

4. Consequently, the Tribunal allowed the appeal in favor of the assessee, directing the assessing officer to delete the disallowance amount. Grounds 3 and 4 of the appeal were not adjudicated due to the decision on the first two grounds. The Tribunal's decision was based on the inconsistency in the details submitted in Form 3CD and the jurisdictional High Court's ruling supporting the assessee's position on the due date for payment of employees' contributions.

5. The Tribunal's ruling clarified the interpretation of Section 36(1)(va) and highlighted the importance of considering the due date for payment in the context of filing the Income Tax Return. The decision emphasized the need for consistency in applying the law and judicial precedents to determine the allowability of deductions related to employees' contributions to provident fund and ESIC.

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