Employee’s contribution to ESI/PF deposited for AY 2018-19 before filing of ITR is eligible for deduction: ITAT

Case Details: Bromide Chemical Industries v. DCIT - [2022] 135 taxmann.com 79 (Jabalpur - Trib.)

Judiciary and Counsel Details

• • Sanjay Arora, Accountant Member
  • Sukesh Kumar, FCA for the Appellant. 
  • S.K. Halder, Sr. DR for the Respondent.

Facts of the Case

The assessee had deposited the amount received from his employees as contributions in Provident Fund and ESI fund after the due date prescribed in corresponding statutes but before the due date of filing return of income under section 139(1) for the relevant year.
Assessing Officer (AO) added same to assessee’s returned income under section 143(1)(a) as same stood deposited beyond due date specified under section 36(1)(va).

ITAT Held

The Tribunal held that the Finance Act 2021 had amended provisions of section 43B and section 36(1)(va) to restrict the deduction of an employee’s contribution to Provident Fund and ESI only if the same is deposited within the due date prescribed in corresponding statutes.

However, this amendment is prospective in nature, effective from Assessment Year 2021-22 as stated in notes on clauses to and Memorandum explaining Provisions of Finance Bill, 2021. Thus, no addition could be made if the sum deposited by the assessee towards employee’s contribution pertained to Assessment Year 2018-19.

Case Review

• • Nikhil Mohine v. Dy. CIT [IT Appeal Nos. 37 & 38 (Jab.) of 2021, dated 18-11-2021] (para 4.2) followed.

List of Cases Referred to

• • Nikhil Mohine v. Dy. CIT [IT Appeal Nos. 37 & 38 (Jab.) of 2021, dated 18-11-2021] (para 2)
  • CIT v. Gujarat State Road Transport Corpn. [2014] 41 taxmann.com 100/223 Taxman 398/366 ITR 170 (Guj.) (para 3.1)
  • ITO v. Volkart Bros. [1971] 82 ITR 50 (SC) (para 4.1)
  • Asstt. CIT v. Saurashtra Kutch Stock Exchange Ltd. [2008] 173 Taxman 322/305 ITR 227 (SC) (para 4.2)
  • CIT v. Smt. Aruna Luthra [2001] 118 Taxman 932/252 ITR 76 (Punj. & Har.) (para 4.2).