Allowing the appeal of the revenue the Court held that , Employees Sate Insurance and provident fund dues paid beyond prescribed period is not allowable as deduction .( AY. 2000-01)
CIT v. Bharat Hotels Ltd ( 2019) 410 ITR 417 ( Delhi) (HC)
S. 43B : Deductions on actual payment – Employees Sate Insurance and provident fund dues paid beyond prescribed period – Not allowable as deduction .[ S.2 (24)(x), 36 (1)(va) ]
When in the matter, applicability of section 43B was not an issue before the court how it can be said that the court opened that PF & ESI employee’s contribution is out of section 43B of the Act. In this case the issue only was that whether amount paid within grace period of 5 days would be considered as payment made within due date provided in Explanation to section 36(1)(va) or not. This decision does not over rule the findings of the court in the case of Aimil Ltd. Recent various ITAT decisions confirming that PF & ESI employee’s contribution paid before the due date of filing of return u/s 139(1) is allowable deduction u/s 43B of the Act:
ITAT Hyderabad in Crescent Roadways Pvt Ltd vs DCIT, ITA No. 1952/2018 vide Order dated 1.07.2021 observed that the legislature has not only incorporated necessary amendment in Sections 36(1)(va) as well as 43B vide Finance Act, 2021 to this effect but also the CBDT has issued Memorandum of Explanation that the same applies w.e.f. 1.4.2021 only. Also deleted the addition of Rs.2,83,203/- Rs.44129 made by the Assessing Officer representing delay in remittance of employees contribution towards provident fund and ESI respectively and allowed the appeal of the assessee.
ITAT Delhi in a DCIT vs Planman HR (P) Ltd ITA No. 5152/2017 order dated 15.07.2021 confirmed the finding of the CIT(A) deleting addition of Rs.8,90,53,240/- relying on the decisions in the case of Pr.CIT vs Planman HR (P) Ltd ITA 599/2017 order dt. 11.09.2017, CIT vs Aimil Ltd 321 ITR 508 (Delhi), Sagun Foundry Pvt Ltd vs CIT 291 CTR 557 (All) and Essac Teraoka Pvt Ltd vs DCIT 366 ITR 408 (Kar.).
ITAT Chennai in DCIT vs Talenpro India HR Pvt Ltd ITA No. 265/2019 order dt. 9.04.2021 confirmed the finding of the CIT(A) deleting addition of Rs.1,50,07,637/- relying on the decision in the case of CIT vs Industrial Security & Interlligence India Pvt Ltd TCA Nos. 585 & 586/2015 order dated 24.07.2015 (Mad), CIT vs Alom Extrusions Ltd 319 ITR 306 (SC) and CIT vs Aimil Ltd 321 ITR 508 (Delhi) wherein it has been observed that if the assessee has remitted the remittance of the employee’s contribution to PF and ESI much before the filing of the return of income under section 139(1) of the Act, no disallowance is called for i.e. it is an allowable deduction u/s 43B of the Income Tax Act, 1961.
The Hon’ble ITAT Agra in Mahadev Cold Storage vs Jurisdiction Assessing Officer ITA Nos. 41&42/2021 and Vinod Thanwerdas vs Jurisdiction Assessing Officer 20&21/2021 order dt. 14.06.2021 following the decision in the case of Sagun Foundry (P) Ltd vs CIT 145 DTR 265, allowed the appeals deleting additions observing that as the payment have been made before the due date specified u/s 139(1) and as such are fully allowable.
When in the matter, applicability of section 43B was not an issue before the court how it can be said that the court opined that PF & ESI employee’s contribution is out of section 43B of the Act. In this case the issue only was that whether amount paid within grace period of 5 days would be considered as payment made within due date provided in Explanation to section 36(1)(va) or not. This decision does not over rule the findings of the court in the case of Aimil Ltd. Recent various ITAT decisions confirming that PF & ESI employee’s contribution paid before the due date of filing of return u/s 139(1) is allowable deduction u/s 43B of the Act:
ITAT Hyderabad in Crescent Roadways Pvt Ltd vs DCIT, ITA No. 1952/2018 vide Order dated 1.07.2021 observed that the legislature has not only incorporated necessary amendment in Sections 36(1)(va) as well as 43B vide Finance Act, 2021 to this effect but also the CBDT has issued Memorandum of Explanation that the same applies w.e.f. 1.4.2021 only. Also deleted the addition of Rs.2,83,203/- Rs.44129 made by the Assessing Officer representing delay in remittance of employees contribution towards provident fund and ESI respectively and allowed the appeal of the assessee.
ITAT Delhi in a DCIT vs Planman HR (P) Ltd ITA No. 5152/2017 order dated 15.07.2021 confirmed the finding of the CIT(A) deleting addition of Rs.8,90,53,240/- relying on the decisions in the case of Pr.CIT vs Planman HR (P) Ltd ITA 599/2017 order dt. 11.09.2017, CIT vs Aimil Ltd 321 ITR 508 (Delhi), Sagun Foundry Pvt Ltd vs CIT 291 CTR 557 (All) and Essac Teraoka Pvt Ltd vs DCIT 366 ITR 408 (Kar.).
ITAT Chennai in DCIT vs Talenpro India HR Pvt Ltd ITA No. 265/2019 order dt. 9.04.2021 confirmed the finding of the CIT(A) deleting addition of Rs.1,50,07,637/- relying on the decision in the case of CIT vs Industrial Security & Interlligence India Pvt Ltd TCA Nos. 585 & 586/2015 order dated 24.07.2015 (Mad), CIT vs Alom Extrusions Ltd 319 ITR 306 (SC) and CIT vs Aimil Ltd 321 ITR 508 (Delhi) wherein it has been observed that if the assessee has remitted the remittance of the employee’s contribution to PF and ESI much before the filing of the return of income under section 139(1) of the Act, no disallowance is called for i.e. it is an allowable deduction u/s 43B of the Income Tax Act, 1961.
The Hon’ble ITAT Agra in Mahadev Cold Storage vs Jurisdiction Assessing Officer ITA Nos. 41&42/2021 and Vinod Thanwerdas vs Jurisdiction Assessing Officer 20&21/2021 order dt. 14.06.2021 following the decision in the case of Sagun Foundry (P) Ltd vs CIT 145 DTR 265, allowed the appeals deleting additions observing that as the payment have been made before the due date specified u/s 139(1) and as such are fully allowable.