Q.Is confirming of dis-allowance for Delayed deposit of employees contribution to PF and ESI u/s 36(1)(va) read with Section 2(24)(x) of the IT Act, 1961 despite the assessee contributing/depositing the same before the due date of filing of return of income u/s 139(1) of the Act is justified after amendments in Explanation 5 of the section 43B.
Answer: The Explanation 5 was inserted by the Finance Act, 2021, with effect from 01.04.2021 and has not been made retrospectively so the law laid down by the Jurisdictional Hon’ble High Court will apply Hence, in view of the decision of the Supreme Court in the case of Commissioner of Income Tax vs. Alom Extrusion Ltd., reported in 2009 Vol.390 ITR 306, held that the deletion was justified. The ITAT- Kolkata in the case of Harendra Nath Biswas, Kolkata vs Dcit, Cir. 29, Kolkata on 16 July, 2021 ITA No.186/Kol/2021 decided the issue in favour of the assessee ITAT- Hyderabad :Crescent Roadways Private … vs Dy. CIT, … on 1 July, 2021 ITA No. 1952/Hyd./2018, ITAT- Hyderabad: Secunderabad Hotels Private … vs ACIT, on 29 June, 2021 ITA No. 268/Hyd./2020 and ITAT- Hyderabad: Chiphercloud India Private … vs Income Tax Officer, Ward-1(2), … on 29 June, 2021 ITA No. 1367/Hyd./2018, ITAT- Hyderabad: Chiphercloud India Private … vs ITO, Ward-1(2), … on 29 June, 2021 ITA No. 1367/Hyd./2018 and ITAT- Hyderabad Sundar Tajmahal Hotels Private … vs DCIT.. on 16 June, 2021 ITA No. 605/Hyd/2020. It was held 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. Keeping in mind the fact that the same has been clarified to be applicable only with prospective effect from 1.4.2021, we hold that the impugned disallowance is not sustainable in view of all these latest developments. The impugned ESI/PF disallowance is deleted therefore.