The Income Tax Appellate Tribunal (ITAT), Delhi Bench has recently held that late deposit of Provident Fund(PF), Employees State Insurance (ESI), or Employees Provident Fund (EPF) is not a sufficient reason for disallowing the claims as long as the deposit has been made before the due date to file the Income Tax Return (ITR) of the relevant assessment year.
The tribunal of Judicial Member Narender Kumar Choudhry and Accountant Member Anil Chaturvedi, ruling in favor of the assessee, observed that the amendment brought out by Finance Act 2021 does not apply to the assessment year under consideration.
“Notes on clauses” to the Finance Bill, 2021 state that the amendment will take effect from 1st April 2021 and will apply in relation to the assessment year 2021-22 and subsequent assessment year.
It was also not contended by the Revenue that the assessee deposited the contribution after filing the income tax return.
A decision of the Delhi High Court, PCIT vs. Pro Interactive Service (India) Pvt. Ltd. (2018) was relied on by the bench in which the matter had already been settled in the assessee’s favor.
The employee’s contribution towards EPF deposited by Ajashy Engineering Sales Pvt. Ltd., was thus observed to be deductible by the tribunal, following the Delhi High Court’s decision.
The Assessing Officer was also directed to delete the additions in this regard amounting to Rs. 7.32 Lakhs. The impugned order of the CIT(A) was also set aside.
It was thus reiterated that the contributions towards EPF/ESI/PF paid after the respective due dates but before the due date of filing the Income Tax Returns were deductible.
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