PF & ESI Payments Allowed if Made Before Tax Return Due Date, Despite Late Payments per Finance Act 2021 Amendment.

The Tribunal allowed the assessee's appeal, ruling that PF and ESI payments made beyond their respective due dates but before the due date for filing the return for the assessment year 2019-2020 were allowable. The Tribunal, referencing a Delhi HC judgment, determined that the Finance Act, 2021 amendment to section 36(1)(va) was prospective. Consequently, the addition made by the AO and confirmed by the CIT(A) was deleted, favoring the assessee. The decision aligned with established legal principles and previous Tribunal decisions, emphasizing the prospective nature of the amendment.

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Issues: Appeal against disallowance of PF & ESI paid beyond due date but before filing return for assessment year 2019-2020.

Analysis:
1. The appeal was filed against the CIT(A)'s order confirming the disallowance of PF & ESI paid beyond the due date under the respective Acts but before the due date of filing the return. The assessee argued that the issue was covered by a previous Tribunal decision and the amendment brought by the Finance Act, 2021 was prospective.

2. The respondent contended that the Finance Act, 2021 amendment should be read retrospectively based on Supreme Court precedents. The respondent argued that the amendment was declaratory and retrospective, citing relevant case law and the operative date of the amendment.

3. The Tribunal considered the submissions regarding the retrospective/prospective operation of the Finance Act, 2021 amendment. Referring to a Delhi High Court judgment, it was established that the amendment to section 36(1)(va) was to operate prospectively. Since the issue concerned the allowability of PF and ESIC payments within the due date of filing the return, the Tribunal ruled in favor of the assessee based on a previous Tribunal decision and the principles laid down by the Delhi High Court.

4. The Tribunal concluded that the addition made by the Assessing Officer and confirmed by the CIT(A) was deleted, and the appeal of the assessee was allowed. The decision was based on the settled legal position and precedents cited during the proceedings.

5. Therefore, the Tribunal's order dated 20/09/2022 favored the assessee, emphasizing the allowability of PF and ESI payments made within the due date of filing the return, in line with the principles established by the Delhi High Court and previous Tribunal decisions.

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