J & K Tourism Development Corporation Ltd. Vs ACIT (ITAT Amritsar)
No disallowance can be made that the payment to the employee’s contribution to PF and ESI paid by the assessee before the due date of filing of return of income u/s. 139(1). Accordingly, we hold that no disallowance can be made in the assessment year prior to Assessment Year 2021-22.
Facts- In all the cases the action of the AO disallowing the amount being contribution of employees’ share towards Provident Fund, ESI, PF or any other fund set up for the welfare of the employee u/s 36(1)(va) read with Section 2(24)(x) when the payments were made within the due dates of filing of return u/s 139(1) of the Act.
In brief in the lead case the AO disallowed the deduction amount to Rs. 1,58,45,576/- during assessing the return U/s 143(3) of the Act in respect of employees’ contribution towards PF and ESI. According to the AO, in view of Section 2(24)(x) rws 36(1)(va) of the Act, the employees contribution is to be paid within the due date of payment as prescribed in the respective Acts (PF/ESI Acts) to claim deduction. But the assessee paid the amount before filing of Income tax Return U/s 139(1) of the Act not within the stipulated dates under PF & ESI Act.
CIT(A) uphold the order. Being aggrieved, the assessee preferred the present appeal.
Conclusion- The following the decisions of the High Court which are based on the principle laid down in the case of Vinay Cement Ltd. (supra), M.M. Technologies Ltd (supra), Vatika Township (P.) Ltd (supra) & the co-ordinate Benches (supra) have passed catena of judgments holding the same proposition that prior to the amendment brought in the statute w.e.f. 1-4-2021, no disallowance can be made that the payment to the employee’s contribution to PF and ESI paid by the assessee before the due date of filing of return of income u/s. 139(1). Accordingly, we hold that no disallowance can be made in the assessment year prior to Assessment Year 2021-22.
FULL TEXT OF THE ORDER OF ITAT AMRITSAR
All the aforesaid appeals have been filed by the captioned assessees against the orders of Commissioner of Income Tax (Appeal) passed under section 250(6) of the Income Tax Act, 1961.
2. First we will consider the Appeal No-153/Asr/2019 for AY 2015-2016 as lead case.
3. Grounds of the Assessee are as follows:-
“1. That the worthy CIT(A) is not justified in confirming the action of ld. AO in imposing addition of Rs. 15845576/- for not depositing share of employee’s contribution towards Provident Fund before the due date specified under the PF Act.
2. That the appellant craves, leave to alter, amend and add to substitute any ground of appeal before or at the time of hearing.”
4. In all the cases the action of the Assessing Officer (in brevity AO) disallowing the amount being contribution of employees’ share towards Provident Fund, ESI, PF or any other fund set up for the welfare of the employee u/s 36(1)(va) read with Section 2(24)(x) of the Income Tax Act, 1961 [hereinafter referred to as the Act] when the payments were made within the due dates of filing of return u/s 139(1) of the Act.
5. In brief in the lead case the AO disallowed the deduction amount to Rs. 1,58,45,576/- during assessing the return U/s 143(3) of the Act in respect of employees’ contribution towards provident fund. As per the Provident Fund Act (hereinafter referred to as the PF Act) & Employees’ State Insurance Act, 1948 (hereinafter referred to as the ESI Act). According to the AO, in view of Section 2(24)(x) rws 36(1)(va) of the Act, the employees contribution is to be paid within the due date of payment as prescribed in the respective Acts (PF/ESI Acts) to claim deduction. But the assessee paid the amount before filing of Income tax Return U/s 139(1) of the Act not within the stipulated dates under PF & ESI Acts.
5.1. The observation of the ld. AO is as follows:-
“During the assessment proceedings It has been observed in the Audit report that the assessee has not deposited Provident fund Employees share within due dates as reproduced hereunder. The same issue was discussed with the AR of the assessee company, it has been notice that provident fund has not been deposited by the due dates for the following months
