Amended Provisions relating to Income Tax Deduction towards Contribution towards ESI and PF not applicable to AY 2018-19: ITAT [Read Order]

The Bangalore bench of the Income Tax Appellate Tribunal (ITAT) has held that the amended provisions of section 43B and 36(1)(va) of the Income Tax Act, 1961 relating to employees’ contribution towards ESI and PF are not applicable to the Assessment Years 2018-19.

The assessee challenged the order of the the Centralized Processing Centre (CPC) wherein the department added a sum of Rs.68,76,397/- under the head Profits & Gains from business representing employees’ share of contribution to ESI to the extent not paid on or before the due date as mentioned in Sec 36(1)(va) of the Act.

The Tribunal bench comprising Shri N.V. Vasudevan, Vice President and Shri B.R. Baskaran, Accountant Member observed that the amended provisions of section 43B as well as 36(1)(va) of the I.T. Act are not applicable for the assessment year under consideration.

Allowing relief to the assessee, the Tribunal held that “By following the binding decision of the Hon’ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT (supra), the employees’ contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the I.T. Act is an allowable deduction. Accordingly, we decide this issue in favour of the assessee and the disallowance made by the Assessing Officer is deleted.”

“The Ld D.R submitted that the Hon’ble Gujarat High Court has taken a contrary view on this issue in the case of CIT vs. Gujarat Road Transport Corpn. (2014)(41 taxmann.com 100) and the matter is pending before Hon’ble Supreme Court. Accordingly, he prayed that in the event of Hon’ble Apex Court taking a view in favour of the revenue on this issue confirming the view taken by Hon’ble Gujarat High Court, then the Revenue should be given liberty to seek rectification of the present order. The prayer of the Ld D.R so made is accepted, subject to the statutory limitations, if any,” the Tribunal said.

To Read the full text of the Order CLICK HERE

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