TMI Blog2022 (2) TMI 1145X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount paid is allowed as an expenditure only when payment is actually made. We do not think that the legislative intent and objective is to treat belated payment of Employee s Provident Fund (EPD) and Employee s State Insurance Scheme (ESI) as deemed income of the employer under section 2(23)(x) of the Act - Decided in favour of assessee. - ITA No.1545/Del/2021 - - - Dated:- 25-2-2022 - Shri Kul Bharat, Judicial Member For the Appellant : Shri M.R.Sahu, CA For the Respondent : Shri Anil Kumar Sharma, Sr.DR ORDER PER KUL BHARAT, JM : This appeal filed by the assessee for the assessment year 2019-20 is directed against the order of Ld. CIT(A), National Faceless Appeal Centre ( NFAC ) dated 30.09.2021. 2. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding orders of jurisdictional High Court. 4. That CIT(A)-NFAC, Delhi erred in applying the amendment brought in by the Finance Act,2021 in the provisions of section 36(1)(va) applicable w.e.f 1st April, 2021 relevant to F.Y 2020-21 which was categorically mentioned in the 'Memorandum -Explaining the Provisions of the Finance BiII,2021' accordingly entire disallowance relating to AY 2019-20 amounting ₹ 11,45,054/- on account of delayed deposit of employees contribution to PF and ESI being deposited on or before the due date of filling return of income u/s 139(1) deserves to be deleted in full. 5. That CIT(A)-NFAC, Delhi erred in passing appeal order confirming addition of ₹ 11,45,054/- on account of delayed de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Revenue by observing as under:- 8. Having regard to the specific provisions of the Employees Provident Funds Act and ESI Act as well as the concerned notifications which granted a grace period of 5 days (which appears to have been late withdrawn recently on 08.01.2016), we are of the opinion that the ITAT s decision in this case was not correct. The assessee undoubtedly was entitled to claim the benefit and properly treat such amounts as having been duly deposited, which were in fact deposited within the period prescribed (i.e. 15 + 5 days in the case of EPF and 21 days + any other grace period in terms of the extent notification). As far as the amounts constituting deductions from employees salaries towards their contributions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n being deposited beyond the due date as prescribed in the respective Act but before the filing of return u/s. 139(1) of the IT. Act comes within the purview of Section 43B(b) as an allowable deduction. This query is being clarified by the insertion of Explanation 5 to Section 43B by the Finance Act, 2021 w.e.f. 01.04.2021 which is as under: [Explanation 5.-For the removal of doubts, it is hereby clarified that the provisions of this section shall not apply and shall be deemed never to have been applied to a sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 applies.] Therefore, the law is now made clear that Section 43B(b) attracts the allowability as a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 185 Taxman 416 (SC). The decision of Hon'ble Supreme Court is not applicable to the facts and circumstances of the case because Hon'ble Supreme Court has decided the issue in Alom Extrusions Ltd. case qua employers contribution as per section 43B(b) of the Act and not qua employees contribution u/s. 36(1)(va) of the Act. The various other judicial decisions quoted by the appellant are considered and found not to be applicable in the case of appellant since the provisions of section 36(1)(va) and section 43B has been amended as discussed in above paras to provide clarity and certainty on non-applicability of section 43B on employees contribution to specified fund. Therefore, the employee contribution of PF/ESI deposited beyond the du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve intent was/is to ensure that the amount paid is allowed as an expenditure only when payment is actually made. We do not think that the legislative intent and objective is to treat belated payment of Employee s Provident Fund (EPD) and Employee s State Insurance Scheme (ESI) as deemed income of the employer under section 2(23)(x) of the Act. Therefore, respectfully following the ratio laid down by the Hon ble Jurisdictional High Court in the above-mentioned binding precedents, I hereby direct the Assessing Officer to delete the disallowance. Thus, grounds raised by the assessee are allowed. 10. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 25th February, 2022. - - TaxTMI - TMITa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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