The employer’s contribution under Section 43B of the Income Tax Act, 1961 is acceptable if the payment is made prior to the filing of returns, according to a recent decision by the Income Tax Appellate Tribunal (ITAT) Amritsar bench. The decision deleted the addition.
The instant appeal of the assessee was filed against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], NFAC, Delhi order passed under Section 250 of the Income Tax Act.
The fact is that the assessee, M/s Sparrow Security Services has filed return under Section 139(1) for the impugned assessment year.
By accepting the assessee’s audit report, the CPC processed the return in accordance with Section 143(1) of the Act, adding Rs. 48,07,613 to account for contributions made in relation to the Provident Fund (PF) and Employee State Insurance (ESI) that were deposited late. This was executed in accordance with Section 36 (1)(va) of the Act. The assessee appealed the Assessing Officer’s decision before the CIT(A).
The representative of the assessee submitted that the employer contribution is related to section 43B which is covered by the Central Board of Direct Taxes (CBDT) Circular No. 22/2015 dated 17.12.2015.
According to the CBDT circular, the employer contribution should be allowed if the payment is done before the filing of return under Section 139(1) of the Income Tax Act.
The counsel fully relied on this Circular and placed that the employer contribution amount to Rs.28,91,068 would not be attracted under the purview of taxable income and the entire amount was paid before the filing the return.
The Tribunal bench of Dr. M.L. Meera and Anikesh Banerjee observed the CBDT circular and upheld the submissions made by the assessee. Thus the Coram deleted the addition made by the AO.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
