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TMI Blog2021 (12) TMI 1251X X X X Extracts X X X X X X X X Extracts X X X X ..... te, assessee had filed his return of income on 2.10.2018 declaring total income of Rs. 26,11,320/-. While processing the return of income filed by the assessee, the Centralised Processing Centre (CPC) disallowed employee's contribution to Provident Fund and ESI, since, such payments were not made within the due date provided under the relevant Acts and Rules governing such payment. Against the disallowance so made amounting to Rs. 21,56,580/-, assessee preferred an appeal before learned Commissioner (Appeals). However, referring to the amendment made to section 36(1)(va) by Finance Act 2021 w.e.f. 1.4.2021 and the corresponding amendment made to section 43B by inserting Explanation 5, learned Commissioner (Appeals) held that as a result of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to PF and ESI including employee's contribution, is allowable as deduction under section 43B r.w.s 36(1)(va) of the Act if it is paid before the due date of return of income prescribed under section 139 (1) of the Act. Undisputedly, in the facts of the present appeal the employees' contribution to PF and ESI were paid before the due date of return of income prescribed under section 139(1) of the Act. However, assessee's claim has been disallowed by applying the amended provisions of section 36(1)(va) and 43B of the Act. Though, the amendment to the aforesaid provisions restricting the applicability of section 43B to employee's contribution to PF and ESI as well as explaining the due date of payment of the aforesaid dues have been broug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee. It is the submission of the Learned Counsel for the Assessee that payment for employees' contribution towards PF & ESI have been made before the due date of filing of the income tax return under section 139(1), therefore, in view of the consistent decisions ITA.N0.1853/DeL/2020 Mr. Vansh Jain, New Delhi of the Coordinate Benches of the Tribunal, the same does not call for any disallowance. It is also his submission that after the decision of the Hon'ble Delhi High Court in the case of CIT vs., M/s. Bharat Hotels Ltd., (supra), the Hon'ble Delhi High Court in the case of PCIT vs., Pro Interactive Service (India) Pvt. Ltd., vide ITA.No.983/2018 order dated 10.09.2018 has held that no disallowance is called for wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposited by the assessee within the due date prescribed under the respective ESI and PF statue however, same was deposited before the due date of filing of return of income. Therefore, the Id AO as well as the Id CIT(A) disallowed the same holding that such contribution becomes the income of the assessee under the provision of section 2(24)(x) of the Act and thereafter if the same is deposit within the due date prescribed under the respective laws then same is allowable as deduction u/s 36(i)(va) of the Act. Coordinate bench in case of DCIT Vs Dee Development Engineers in ITA No. 4959/DEL/2016 (A.Y 2011-12) has held as Under:- "7. We have heard both the parties and perused all the relevant material available on record. As regards Ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ., the issue is covered in favour of the assessee. Hence, Ground No. 1 is dismissed." 7. Further with respect to the argument of the learned departmental representative that amendment made with finance act 2021 wherein explanation 1 is added u/s 36 (1) (va) of the act with effect from 1 April 2021, is applicable to the present case, we referred to the "Notes on clauses" at the time of introduction of the finance bill 2021 which says as Under:- "Clause 8 of the Bill seeks to amend section 36 of the Income tax Act, relating to other deductions. Sub-section (1) of the said section provides for allowing of deductions provided for in the clauses thereof for computing the income referred to in section 28 of the said Act. Clause (va) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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