The Income Tax Appellate Tribunal (ITAT), Delhi bench has held that the claim of deduction of contribution to Employee’s State Insurance Scheme (ESI) and Provident Fund u/s.36(1)(va) could not be denied to the assessee for the period prior to the amendment in the provision under Finance Act, 2021.
In the instant case, the Assessing Officer disallowed Rs.2,32,41,551/- on account of a delayed payment of employee’s contribution towards EPF and ESI. The assessee carried the matter before the Tribunal after failing to secure relief from the Commissioner of Income Tax (Appeals).
The bench comprising Judicial Member Mr. Amit Shukla and Accountant Member Mr. Pradeep Kumar Kedia held that delayed payment of employee’s contribution to PF/ESIC is not disallowable as the amendments to Section 36(1)(va) and Section 43B effected by Finance Act, 2021 were applicable prospectively in relation to Assessment Year 2021-22 and subsequent years.
“Therefore, the claim of deduction of contribution to Employee’s State Insurance Scheme (ESI) and Provident Fund u/s.36(1)(va) could not be denied to the assessee in Assessment Year 2017-18 in question on the basis of amendments made by Finance Act, 2021. For this proposition, we find support from the decision of the Co-ordinate Bench of Tribunal in the case of The Continental Restaurant and Café Company vs. ITO as reported in (2021) 91 ITR (Trib.)(S.N.) 60 (Bang.) and Adyar Ananda Bhavan Sweets India P. Ltd. vs. ACIT, ITA No.402 and 403/Chny/2021 order dated 08.12.2021. Consequently, the action of revenue on this score is set aside and canceled,” the Tribunal said.
Subscribe Taxscan Premium to view the Judgment
Support our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.
