The Amritsar Bench of Income Tax Appellate Tribunal (ITAT) held that the assessee to claim deduction of employee’s share of ESI & PF if deposited prior to ITR filing.
The assessee, Vinko Auto Industries preferred first appeals before the CIT(A), however, the CIT(A) sustained the additions made by the AO for the respective assessment years under consideration while dismissing both the appeals of the assessee.
The issue involved in the instant appeals relates to the deposit of employees’ contributions qua ESI & PF after the due date as prescribed in the relevant Acts, however, before the due date of filing of return of income u/s.139(1) of the Act, resulting into disallowance of Rs.5,88,203/- for A.Y.2018-2019 and Rs.60,540/- for A.Y.2019-2020 made by the A.O.
The CIT(A) while upholding the disallowance/addition qua employees contributions towards PF & ESI mainly focused on two aspects/determinations non-applicability of the provisions of Section 43B of the Act to the employee’s share qua PF & ESI and applicability of the amended provisions of Section 36(1)(va) and 438 of the Act wherein Explanations have been inserted by Finance Act, 2021. For better clarification and ready reference the Explanations 2 and 5 inserted in sections 36(1)(va) and Section 43B of the Act respectively.
The coram headed by the Vice President N.K.Saini and Judicial Member, N.K.Choudhary held that there is a plethora of judgments in favour of the Assessee’s contention and of the Revenue. The controversy with regard to divergent views of different High Courts, has been settled by the Hon’ble Apex Court in the case of CIT VS. M/s. Vegetables Products Ltd. (88 ITR 192) by laying the dictum that if two reasonable constructions of a taxing provision are possible that construction which favours the Assessee must be adopted.
The ITAT further said that there are no contrary judgements of the jurisdictional High Court against the assessee on the aspect under consideration hence, first determination of the Ld. CIT(A) qua non-applicability of the provisions of Section 43B of the Act to the employee’s share qua PF & ESI, is unsustainable.
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