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Income Tax Appellate Tribunal, PUNE BENCH, ‘B’ PUNE – VIRTUAL COURT
Before: SHRI R.S. SYAL & SHRI PARTHA SARATHI CHAUDHURY
आदेश / ORDER PER BENCH : These two appeals by the assessee relate to the assessment years 2018-19 and 2019-12 involving a common issue. These are, therefore, clubbed for disposal on merits for the sake of convenience. 2. In the appeal for the assessment year 2018-19, the only issue raised is against the disallowance of Rs.5,25,409/- made by the AO towards Employees contribution to EPF/ESIC which was deposited belatedly but before the time limit prescribed u/s.139(1) of the Act. The ld. CIT(A) confirmed the disallowance in terms of section 36(1)(va) of the Act. Aggrieved thereby, the assessee has approached the Tribunal.
We have heard both the sides in Virtual Court and gone through the relevant material on record. It is an admitted position that the assessee did deduct employees’ share of EPF and ESI but paid the same after the due date under the respective legislations but before the time for filing return u/s 139(1) of the Act. In our opinion, 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 due date under the respective Acts but before the date prescribed u/s 139 of the Act. The Hon’ble Himachal Pradesh High Court in CIT vs. Nipso Polyfabriks Ltd. (2013) 350 ITR 327 (HP) has held that there exists no difference between employees or employer’s contribution and both are to be allowed as deduction if deposited before the due date.
At this juncture, it is relevant to mention 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 is that if the amount of employees’ contribution towards EPF, ESI, etc is delayed by an employer beyond the due date under the respective Acts, the disallowance will be called for notwithstanding the fact that it was deposited before the due date u/s 139 of the Act. The Memorandum explaining the provisions of the Finance Bill, 2021, provides that this amendment will take effect from 1st April, 2021 and will, accordingly apply in relation to assessment year 2021-2022 and subsequent assessment years. Since the assessment year under consideration, namely, 2018- 19 is anterior to the amendment carried out with effect from A.Y. 2021-22, we hold that the position of law as set out by various Hon’ble High Courts including the one in CIT vs. Nipso Polyfabriks Ltd. (supra) squarely applies to the facts and circumstances of the instant case, thereby not warranting any disallowance since the amount in question was admittedly deposited before due date u/s 139(1) of the Act. The addition is therefore, directed to be deleted.
For the assessment year 2019-20, the position is similar. The assessee late deposited the employees’ share of contribution to EPF/ESI etc., amounting to Rs.2,10,940/-, which was disallowed by the AO. The ld. CIT(A) sustained the disallowance.
Having heard both the sides and gone through the relevant material on record, it is found as an admitted position that the facts and circumstances of this year are mutatis mutandis similar to those of the preceding year. Following the view taken hereinabove, we order to delete the addition.
In the result, both the appeals are allowed. Order pronounced in the Open Court on 08th February, 2022.