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Income Tax Appellate Tribunal, HYDERABAD ‘A’ BENCH, HYDERABAD.
O R D E R Per Shri S.S. Godara, J.M. : This assessee’s appeal for A.Y. 2018-19 arises against the Commissioner of Income Tax (Appeals)-3, Hyderabad’s order dated 31.07.2020 passed in case no.
10159/2019-20/B2/CIT(A)-3 in proceedings u/s 143(1) of the Income Tax Act, 1961 [in short ‘the Act’].
Heard both the parties. Case file perused.
The assessee has raised the following substantive grounds in its appeal.
“3. The ld.CIT(A) ought to have observed that the Assessing Officer erred in disallowing Rs.5,86,493 by invoking the provisions of section 36 of the Income Tax Act as the payment was made after completion of the financial year.
4. The ld.CIT(A) ought to have noted that the payment of the said amount was made within the due date allowed for filing of Return of Income and therefore there is no scope for making disallowance of the said amount and hence the said addition is liable to be deleted.”
Coming to the sole substantive issue of ESI/PF disallowance of Rs.5,86,493, the assessee’s and revenue’s stand is 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 statutes; respectively. We notice in this factual backdrop that the legislature has not only incorporated necessary amendments in Sections 36(va) as well as 43B vide Finance Act, 2021 to this effect but also CBDT has issued Memorandum of Explanation that the same applies w.e.f. 1.4.2021 only. It is further not an issue that the forergoing legislative amendments have proposed employers contributions; disallowances u/s 43B as against employee u/s 36 (va) of the Act; respectively. However, keeping in mind the fact that the same has been clarified to be applicable only with prospective effect from 1.4.2021, We hold that the impugned disallowance is not sustainable in view of all these latest developments even if the Revenue’s case is supported by the following case laws.
(i) CIT vs. Merchem Ltd, [2015] 378 ITR 443(Ker) (ii) CIT vs. Gujarat State Road Transport Corporation (2014) 366 ITR 170 (Guj.) (iii) CIT vs. South India Corporation Ltd. (2000) 242 ITR 114 (Ker) (iv) CIT vs. GTN Textiles Ltd. (2004) 269 ITR 282 (Ker) (v) CIT vs. Jairam & Sons [2004] 269 ITR 285 (Ker)
The impugned ESI/PF disallowance is directed to be deleted therefore.
This assessee’s appeal is allowed.