2022 (9) TMI 1034

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....expenditure in respect of employees' contribution to Provident Fund and Employee State Insurance ((ESI) The ld. CIT(A) has erred in upholding the action of the ld. DCIT, CPC in disallowing expenditure of Rs. 97,18,285/- in relation to employees' contribution to provident fund and ESI u/s 36(1)(va) of the Act even though the same has been paid before the due date of filing return of income and is thereby allowable u/s 43B of the Act. In doing so, the ld. CIT(A) has erred in : (a) Not following the principle of judicial discipline by ignoring the favourable decisions of the Hon'ble Jurisdictional Bombay High Court ('HC') and the Hon'ble Jurisdictional Pune Tribunal. (b) Not appreciating that the decision of the Hon'ble Gujrat High Court in the case of CIT Vs. Gujarat State Road Transport Corpn. (2014) 366 ITR 170(Guj() has been distinguished by Hon'ble Karnataka High Court in case of Essae Teraoka (P) Ltd. (ITA No. 480/2013) and (c) Not appreciating that the amendment introduced in sec. 43B and 36(1)(va) of the Act by the Finance Act, 2021 is prospective in nature applicable from AY 2021-22 and not applicable for the year under consideration. The appellant....

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....ension of Limitation, In re 438 ITR 296 (SC) read with judgment in cognizance for Extension of Limitation, In re 432 ITR 206 (SC) dated 08-03-2021 since the delay was covering pandemic outbreak period, we condone the same and the case is heard on merits. 3. The facts and circumstances and the issues involved in all these appeals are absolutely identical and similar. Therefore, these cases were heard together and are disposed of by this consolidated order. 4. The only issue involved in all these appeals is the disallowance of employees' contribution to Provident Fund as well as ESIC. It is the case of the assessees that as per various decisions of Pune Tribunal it has been held that if the employees' contribution to provident fund is paid before the due date of filing of return of income, then it is deductible as per provisions of section 43B of the Income-tax Act, 1961 (hereinafter referred to as "the Act") and the amendment made by the Finance Act, 2021 inserting Explanation 2 to section 43B is applicable prospectively i.e. from A.Y. 2021-22. Admittedly, in all the present cases before us, the payment of impugned employee's' contribution to provident fund was before the due date....

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....decision of the Tribunal (supra), we find that the identical issue was came up before this Tribunal in the case of Prashant Arun Sangai (supra) wherein the Tribunal decided the similar issue in favour of the assessee relying on the decision of the Hon'ble Himachal Pradesh High Court in the case of CIT vs. Nipso Polyfabriks Ltd. (2013) 350 ITR 327 (HP). The relevant paragraphs of the said decision of the Tribunal (supra) are extracted herein under :- "4. We have heard the ld. DR and gone through the relevant material on record. There is no appearance from the side of the assessee despite notice. We are, therefore, proceeding to dispose of the appeal ex parte qua the assessee on merits. 5. It is seen as an admitted position from the impugned order as well as the statement of facts before the ld. first appellate authority that the assessee did deduct employees' share of EPF and ESI and paid the same after the due date under the respective legislations but before the time stipulated for filing return u/s 139(1) of the Act for the year under consideration. In our opinion, this issue is no more res integra in view of several judgments allowing deduction u/s 36(1)(va) of employees' sh....

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....ssee in ITA No.538/PUN/2021 for A.Y. 2019-20 stands allowed." 6. In the aforestated decision, the Tribunal has relied on Hon'ble jurisdiction High Court decision in the case of CIT Vs. Ghatge Patil Transports Ltd. 368 ITR 749 (Bom) which followed the decision of Hon'ble Himachal Pradesh High Court in the case of CIT Vs. Nipso Polyfabrics Ltd. (2013) 350 ITR 327 (HP). Therefore, we are of the considered view that this issue is no more res integra in view of several judgments allowing deduction u/s 36(1)(va) of employees' share of contribution deposited after the due date under the respective Statutes but before the date prescribed u/s 139(1) of the Act. In fact, it was held by Hon'ble Himachal Pradesh High Court that there exists no difference between the employees' or employers' contribution and both are to be allowed as deduction if deposited before the due date. The relevant observations we need to mention at this juncture that the Finance Act, 2021 has inserted Explanation 2 below section 36(1)(va) providing that the provisions of section 43B shall not apply for the purpose of determining the due date under this clause w.e.f. 01-04-2021. The effect of this amendment....