The Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that the Pension Fund Regulatory and Development Authority ( PFRDA ) Act does not prescribe a specific due date for employees’ contributions to the National Pension System ( NPS ), and contributions made before the filing of the income tax return ( ITR ) are valid.
Adani Electricity Mumbai Ltd., the assessee filed a return of income for AY 2019-20, initially on September 25, 2019, and later revised on January 1, 2020, reporting a total loss of Rs. 10,06,36,03,425 under normal provisions of the Income Tax Act.
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The Central Processing Centre ( CPC ) adjusted the intimation under Section 143(1), reducing the total loss to Rs. 10,03,01,75,248. The adjustment related to disallowance under Section 36(1)(va) of the Income Tax Act concerning late deposits of employees’ contributions to the National Pension Scheme ( NPS ), amounting to Rs. 3,34,28,177.
On appeal, the Commissioner of Income Tax (Appeals) [CIT(A)], upheld the disallowance. Aggrieved by the CIT(A) decision, the assessee appealed before the ITAT, Ahmedabad arguing that no specific due date is prescribed for NPS contributions under the Pension Fund Regulatory and Development Authority ( PFRDA ) Act, 2013, which governs NPS.
The assessee’s counsel contended that the payments were made before the due date of filing the income tax return under Section 139(1), and hence, the contributions should be allowed as a deduction.
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The assessee’s counsel relied on several judicial precedents, including group cases such as Adani Petronet ( Dahej ) Port Pvt. Ltd. and Adani Hazira Port Ltd., where similar issues were decided in favor of the assessee.
On the other hand, the revenue counsel referred to Central Civil Services ( Implementation of National Pension System ) Rules, 2021arguing these rules specify a due date by which employees’ contributions to the NPS must be deposited.
The assessee’s counsel countered by stating that these rules apply only to government employees, including civilian personnel in the defense services, under the Civil Services, or connected to Union Government posts. Since the employees of Adani Electricity do not fall under this category, the rules cited by the revenue are not applicable, and no specific due date for NPS contributions applies to the company’s employees.
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The two-member bench comprising Annapurna Gupta ( Accountant Member ) and Siddhartha Nautiyal ( Judicial Member ) observed that there is no due date prescribed under the PFRDA Act for NPS contributions, and as long as the payment was made before the filing of the return, it should be allowed under Section 43B(b) of the Income Tax Act.
The tribunal recognized that the CIT(A) failed to appreciate the unique nature of NPS and erroneously applied principles governing Provident Fund and ESI contributions, which have clearly defined due dates.
Therefore, the tribunal deleted the disallowance of Rs. 3,34,28,177, and the amount was allowed as a deduction, provided it was paid before the return filing deadline under Section 139(1) of the Income Tax Act. The assessee’s appeal was allowed.
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