The Jodhpur Bench of Income Tax Appellate Tribunal (ITAT) deleted the addition on account of deposits of employees’ contribution of ESI and PF prior to the filing of return of income.
The assessee, Mohan Ram Chaudhary assailed the sustenance of the addition made by the Assessing Officer on account of late deposit of employees share of PF & ESI which were deposited after the due date but before the due date of filing of return of income. The Assessing Officer made the additions of the impugned amounts for the reasons that the assessees did not deposit the amounts of employees contribution as per the provisions of section 36(1)(va) of the Income Tax Act, 1961
The coarm of Vice President, N.K. Saini and Judicial Member, Sandeep Gosain relied on the ITAT decision in the case of Mohangarh Engineers and Construction Company, Jodhpur & Others vs CPC wherein it was held that the explanation appended to Section 36(1)(va) of the Act further envisages that the amount actually paid by the assessee on or before the due date admissible at the time of submitting return of the income under Section 139 of the Act in respect of the previous year can be claimed by the assessee for deduction out of their gross total income. It is also clear that Section 43B starts with a notwithstanding clause & would thus override Section 36(1) (va) and if read in isolation Sec. 43B would become obsolete. Accordingly, the contention of counsel for the revenue is not tenable for the reason aforesaid that deductions out of the gross income for the payment of tax at the time of submission of return under Section 139 is permissible only if the statutory liability of payment of PF or other contribution referred to in clause (b) is paid within the due date under the respective enactments by the assessees and not under the due date of filing of return.
The tribunal deleted the impugned additions made by the Assessing Officer and sustained by the Ld. CIT(A) on account of deposits of employees contribution of ESI & PF prior to the filing of the return of income u/s 139(1) of the Act, in all the years under consideration prior to the amendment made by the Finance Act, 2021 w.e.f. 1.4.2021 vide Explanation 5.
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