Income Tax Appellate Tribunal

Transact BPO Services India Pvt Ltd. Vs. Deputy Commissioner Of Income Tax

MANU/IL/0201/2022

14.03.2022

Direct Taxation

Employees' contribution paid by the assessee before the due date of filing of return of income under Section 139(1) of the I.T. Act is an allowable deduction

The assessee has filed present appeal challenging the order passed by Learned CIT(A), National Faceless Appeal Centre, Delhi and it relates to the assessment year 2019-20. The only issue urged in present appeal relates to disallowance of Rs.4,07,792, being employees contribution to provident fund and employees state insurance, under Section 36(1)(va) of the Income-tax Act,1961 (IT Act)

On identical facts, the Bangalore Bench of the Tribunal in the case of Shakuntala Agarbathi Company Vs. DCIT by following the dictum laid down by the High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT¸ had held that the assessee would be entitled to deduction of employees' contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income under Section 139(1) of the I.T. Act. It was further held by the ITAT that, amendment by Finance Act, 2021, to Section 36[1][va] and 43B of the Act is not clarificatory.

The amended provisions of Section 43B as well as 36(1)(va) of the I.T. Act are not applicable for the assessment year under consideration. By following the binding decision of the High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT, the employees' contribution paid by the assessee before the due date of filing of return of income under Section 139(1) of the I.T. Act is an allowable deduction. The disallowance made by the Assessing Officer is deleted. The appeal filed by the assessee is allowed.

Tags : Assessment Deduction Disallowance

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