MRS SHOBHA PRADEEP SINGH,NASHIK vs. PRINCIPAL COMMISSIONER OF INCOME-TAX -1, NASHIK

This appeal by the assessee against the order dated 28-07-2021 passed by the National Faceless Appeal Centre (NFAC), Delhi for assessment year 2018-19.

The only issue is to be decided is as to whether the CIT(A) justified in confirming the disallowance made u/s 36(1)(va) of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟).

The Assessing Officer (AO), CPC, Bangalore made disallowance u/s 36(1)(va) of the Act for not depositing employees‟ contribution towards PF and ESI within specified time. It was contended by the assessee that the employees‟ contribution was paid within due date of filing of return of income and the assessee is entitled to get deduction. The CIT(A) recorded the said statement in para 2 of the impugned order, but however, disallowed taking into consideration the recent amendment by holding delayed payment of employees‟ contribution is not allowable u/s 43B of the Act. We note that Explanation (1) was inserted to clause (va) of sub-section (1) of section 36 of the Act w.e.f. 01.04.2021, wherein the definition of due date is defined making it clear that the assessee is required as an employer to credit employees‟ contribution to the employees account in the relevant fund under any Act, Rule, Order or Notification issued therein or under any Standing order, Award, Contract of service or otherwise. Admittedly, the assessment year under consideration is 2018-19 and in our opinion, the said amendment by way of Explanation inserted by the Finance Act, 2021 is not applicable. Therefore, the disallowance as confirmed by the CIT(A) is not justified. Thus, it is set aside by holding that the assessee is entitled to get deduction. Thus, the grounds raised by the assessee are allowed.

In the result, appeal of assessee is allowed.