Tribunal allows deductions for employee contributions to PF and ESI before tax return due date.

The Tribunal ruled in favor of the assessee, allowing deductions for employees' contributions to PF and ESI if paid before the due date of filing the income tax return. The disallowance made by the Assessing Officer based on the amendments brought in by the Finance Act, 2021, was rejected, emphasizing that the amendments are prospective and not retrospective. Previous judgments and tribunal decisions supported this interpretation, leading to the allowance of deductions and the deletion of the disallowance for the assessee.

---

---

Issues:
1. Disallowance of delayed remittance of employees' contribution to PF.
2. Interpretation of amendments brought in by the Finance Act, 2021.
3. Applicability of deductions for employees' contribution to PF and ESI.

Issue 1: Disallowance of delayed remittance of employees' contribution to PF:
The appeal was against the order disallowing delayed remittance of employees' contribution to PF by the CIT(A). The assessee contended that the remittance was made before the due date for filing the income tax return under section 139(1) of the Act. The CIT(A) upheld the disallowance, considering the amendment brought in by the Finance Act, 2021. However, the Tribunal referred to previous judgments and held that the deduction is allowable if the payment was made before the due date of filing the return of income. The Tribunal emphasized that the amendment by Finance Act, 2021, is not clarificatory and is only prospective, not retrospective. Consequently, the disallowance made by the Assessing Officer was deleted, and the issue was decided in favor of the assessee.

Issue 2: Interpretation of amendments brought in by the Finance Act, 2021:
The CIT(A) confirmed the addition made by the Assessing Officer, considering the amendments as declaratory/clarificatory/explanatory and retrospective. However, the Tribunal disagreed, citing judgments that clarified the nature of the amendments. The Tribunal held that the amendments to section 36(1)(va) and 43B of the Act by Finance Act, 2021, are not clarificatory and are only prospective, effective from 01.04.2021. Various tribunal orders supported this view, emphasizing that the amendments do not apply retrospectively. The Tribunal concluded that the amended provisions were not applicable for the assessment years under consideration, and the disallowance was deleted based on the binding decision of the jurisdictional High Court.

Issue 3: Applicability of deductions for employees' contribution to PF and ESI:
The Tribunal compared the case with a previous judgment where the High Court had allowed deductions for employees' contribution to ESI if paid before the due date of filing the return of income. The Tribunal reiterated that the amendments by Finance Act, 2021, do not alter this position and are not retrospective. Relying on judicial pronouncements and previous tribunal decisions, the Tribunal directed the Assessing Officer to grant deduction for employees' contribution to ESI since the payment was made before the due date of filing the return of income. Consequently, the appeal was allowed in favor of the assessee.

In conclusion, the Tribunal ruled in favor of the assessee, allowing deductions for employees' contributions to PF and ESI if paid before the due date of filing the income tax return, and rejecting the disallowance made by the Assessing Officer based on the amendments brought in by the Finance Act, 2021.

---