Tribunal allows deductions for PF and ESI contributions, directs review under section 43B

The Tribunal set aside the disallowance under section 43B for the Ld. CIT(A) to review, emphasizing correct reporting in Form 3CA CD and the applicability of section 43B. Contributions for PF and ESI were allowed as deductions if paid before the return filing due date, supported by relevant case laws and the Finance Act, 2021. The adjustment under section 143(a) by CPC was deemed beyond its scope, directing the Assessing Officer to permit the claimed deduction. The assessee's appeal was partially allowed, stressing the significance of timely payments and accurate reporting under the Income Tax Act.

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Issues:
1. Disallowance under section 43B despite payments made before due date.
2. Allowability of employee's contribution for PF and ESI.
3. Adjustment under section 143(a) by CPC beyond purview.

Issue 1: Disallowance under section 43B despite payments made before due date:
The appeal was filed against the order of Ld. CIT(A) under section 250 of the I.T. Act, 1961 for the assessment year 2018-19. The assessee contended that the Ld. CIT(A) erred in not considering the disallowance under section 43B despite payments being made before the due date of filing the return of income. The Tribunal set aside this ground for the Ld. CIT(A) to adjudicate. The issue revolved around the correct reporting of payments in Form 3CA CD and the applicability of section 43B. Various judgments, including those of the Bombay High Court and the Supreme Court, were cited in support.

Issue 2: Allowability of employee's contribution for PF and ESI:
The dispute centered on whether the employee's contribution for PF and ESI should be allowed as a deduction only when deposited by the employer within the prescribed due dates. The Ld. AR for the assessee argued that the impugned amount was deposited before the due date for filing the return of income, citing relevant case laws. The Ld. DR contended that section 43B applied only to the employer's contribution. The Tribunal referred to judgments by various High Courts and the Finance Act, 2021, concluding that contributions paid before the due date of filing the return of income were allowable deductions.

Issue 3: Adjustment under section 143(a) by CPC beyond purview:
The Ld. CIT(A) confirmed the adjustment under section 143(a) made by CPC under sections 43B and 36(1)(va). The assessee challenged this adjustment as being beyond the purview of section 143(1)(a) and not a prima facie adjustment. The Tribunal, after considering precedents and a co-ordinate bench decision, directed the Assessing Officer to allow the deduction claimed by the assessee. The appeal of the assessee was partly allowed based on the above analysis.

This judgment highlights the importance of timely payments and correct reporting under the Income Tax Act, emphasizing the deductibility of contributions made before the due date of filing the return of income. The Tribunal's decision was based on legal precedents and interpretations of relevant provisions, ensuring a fair outcome for the assessee in this case.

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