The Income Tax Appellate Tribunal ( ITAT ), Delhi Bench, has recently in an appeal filed before it, held that contribution to EPF and ESI funds are allowable, if paid before due date of filing income tax return.
The aforesaid observation was made by the Tribunal when an appeal was filed before it by the assessee M/s 360 Realtors LLP, as against the order of the Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), New Delhi, dated 15/12/2021, for Assessment Year 2019-20.
The issue involved in the assessee’s appeal being with regard to the addition of Rs.58,72,654/- made u/s 36(1)(va) of Income Tax Act, 1961,the facts of the case was that these were payments by way of employees’ contribution to ESI/Provident Fund , deposited by the assessee after the specified date prescribed under the relevant laws governing ESI and Provident Fund.
However, these payments being deposited by the assessee well before due date of filing of return of income under Section 139(1) of Income Tax Act, the aforesaid addition of Rs.58,72,654/- was made by way of adjustments u/s 143(1) of Income Tax Act; vide intimation dated 08/02/2021.
Being aggrevied by the same, the assessee had filed an appeal before CIT(A), on 27/02/2021, which was disposed of by the CIT(A) vide the impugned appellate order dated 15/12/2021; wherein he confirmed the aforesaid additions amounting to Rs.58,72,654/, taking the view that amendment to section 36(1) (va) of the Act by way of insertion of Explanation-2 brought in by Finance Act, 2021, is retrospective in nature, and is applicable for AY 2019-20. And it is being aggrieved by the same that the Assessee has filed the instant appeal before the Income Tax Appellate Tribunal, Delhi.
With the appellant via Sh. Aman Garg, CA, presenting its contentions as opposed by that Ms. Maimum Alam, the Senior Departmental Representative, the ITAT Bench consisting of Saktijit Dey, the Judicial Member and Anadee Nath Misshra, the Accountant Member, observed as follows:
“In the present case before us, the addition of the aforesaid amount of Rs.58,72,654/- has been made by way of adjustments and intimation u/s 143(1) of Income Tax Act, on a debatable and controversial issue, and the Ld. CIT(A) did err in law, in not deleting this addition.”
“Thus, we are of the view that the aforesaid additions of Rs.58,72,654/- by way of adjustment and intimation u/s 143(1) of Income Tax Act, were beyond the scope of Section 143(1) of Income Tax Act, and further that the Ld. CIT(A) erred in law in confirming the aforesaid addition on a debatable and controversial issue.”, the ITAT Bench added.
Thus, allowing the assessee’s appeal, it held: “Accordingly, we direct the Assessing Officer to delete the aforesaid addition of Rs.58,72,654.”
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