Belated Payment of Employee's Contribution to ESI and PF: ITAT upholds deletion of Disallowance made u/s 43B [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) in the issue of belated payment of employee's contribution to ESI and PF has upholds the deletion of disallowance made u/s 43B.

The Assessing Officer while completing the assessment of the assessee, Shri Amardeep Singh Bedi, under Section 143(3) of the Act disallowed the employee’s contribution to ESI and PF. Aggrieved by the order assessee preferred appeal before CIT (A) and the CIT (Appeals) deleted the disallowance and allowed the appeal. Against which the revenue preferred appeal before ITAT.

Mr. Manu Chaurasiya, counsel for the revenue submitted that the amendment brought in by the Finance Act, 2021 in Sections 36(1)(va) and 43B of the Act by way of inserting Explanation 2 and Explanation 5 respectively are clarificatory in nature and, therefore, have retrospective applicability.

The Coram of Mr. Narendra Kumar Billaiya, Accountant Member and Mr. Challa Nagendra Prasad, Judicial Member by relying the decision of High Court in the case of CIT Vs. AIMIL Ltd and Tribunal’s own decision in Raj Kumar Vs. ITO observed that the amendment brought in by Finance Act, 2021 is effective from 1.04.2021 and no disallowance is called for, on belated payment of employees’ contribution to ESI and PF in case the assessee deposited the said contribution before due date for filing of return of income under Income Tax Act.

The Tribunal has held that “we direct the Assessing Officer to delete the disallowance made to employees’ contribution to EPF and ESI as the same were remitted before the due date of filing of return of income. Order of the ld. CIT (Appeals) is sustained”.

To Read the full text of the Order CLICK HERE

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