MEMSAHEB EXCLUSIVE,HYDERABAD vs. INCOME TAX OFFICERS,WARD -11(1), HYDERABAD

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ITA 414/HYD/2021Status: DisposedITAT Hyderabad29 November 2021AY 2019-203 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the disallowance was not sustainable. This was due to legislative amendments and CBDT clarifications stating that the provisions regarding disallowance of employee's contribution to ESI/PF apply prospectively from April 1, 2021.

What were the facts?

The assessee claimed a deduction for ESI/PF contributions. The lower authorities disallowed the deduction of Rs. 1,43,065/-. The assessee argued the payment was made before the due date of filing the return, while the revenue contended it was after the statutory due date.

What were the issues?

Whether disallowance of employee's contribution to ESI/PF is sustainable when paid after the statutory due date but before the due date for filing the return, considering recent legislative changes.

Which sections of the Income-tax Act were involved?

Section 36(1)(va),Section 43B,Section 139(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD BENCHES “B” : HYDERABAD

Before: SHRI S.S.GODARA & SHRI LAXMI PRASAD SAHU

PER S.S.GODARA, J.M. : This assessee’s appeal for AY.2019-20 arises from the from the National Faceless Appeal Centre (NFAC), Delhi’s order dated 18-08-2021 passed in DIN & Order No.ITBA/NFAC/S/250/2021-22/1034948339(1), involving proceedings u/s.250 of the Income Tax Act, 1961 [in short, ‘the Act’]. Heard both the parties. Case file perused.

2.

Coming to the assessee’s sole substantive issue raised herein of Section 36(1)(va) ESI/PF disallowance of Rs.1,43,065/- made in both the lower proceedings, the assessee’s and Revenue’s pleas before us are that the same has been paid before the due date of filing Sec.139(1) return and after the due date prescribed in the corresponding statute(s); respectively. We notice in this factual backdrop that the legislature has not only incorporated necessary amendment in Sections 36(1)(va) as well as u/s. 43B vide Finance Act, 2021 to this effect but also the CBDT has issued Memorandum of Explanation that the same applies w.e.f. 01-04-2021 only. It is further not an issue that the foregoing legislative amendments have proposed employers’ contribution/disallowance u/s.43B as against employee’s contribution u/s.36(va) of the Act; respectively. However, keeping in mind the fact that the same has been clarified to be applicable with prospective effect from 01-04-2021 only, we hold that the impugned disallowance is not sustainable in view of all these latest developments. The impugned ESI/PF disallowance is deleted therefore. No other ground has been pressed before us.

3.

This assessee’s appeal is allowed in above terms.

Order pronounced in the open court on 29th November, 2021

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