Disallowance u/s 36(1)(va) for delayed deposit of employees contribution of EPF. Explanation-5 to section 43B not retrospective – ITAT
ABCAUS Case Law Citation
ABCAUS 3532 (2021) (07) ITAT
Important case law relied referred:
CIT vs. Vijayshree Ltd.
CIT vs. Alom Extrusion Ltd.
In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming the disallowance/ addition made by the Assessing Officer (AO) on account of delayed deposit of employees contribution to PF and ESI u/s 36(1)(va) read with Section 2(24)(x) of the Income Tax Act, 1961 (the Act) despite the assessee contributing / depositing the same before the due date of filing of return of income u/s 139(1) of the Act.
CPC while processing the return disallowed employees contribution to EPF and ESI fund which had been deposited beyond the due date applicable under the provision of ESI Act, 1948 and EPF Act by invoking the provision of Section 36(1)(va) of the Act.
The assessee filed an appeal before the National Faceless Appeal Centre (NFAC), Delhi and relied on the various judicial decision including that of the jurisdictional Hon’ble High Court.
However, the CIT(A) did not accept the contentions of the assessee in this regard and by relying on the Explanation-5 to section 43B denied the claim of the assessee.
Disallowance u/s 36(1)(va). Explanation-5 to section 43B not retrospective
The Tribunal observed that said Explanation-5 was inserted by the Finance Act 2021, with effect from 01.04.2021 and was not applicable to the relevant assessment year.
The Tribunal opined that therefore the law laid down by the Jurisdictional Hon’ble High Court will apply since the said Explanation-5 is not made retrospectively.
The Tribunal disagreed with the CIT(A)’s stand denying the claim of assessee since assessee delayed the employees contribtion of EPF & ESI fund.
The Tribunal opined that since the assessee had deposited the employees contribution before filing of Return of Income, following the binding decision of the Hon’ble High Court the assessee succeeds.
Accordingly, the Tribunal allowed the appeal in favour of the assessee.
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