INCOME TAX ACT, 1961

Sections 36(1)(va) & 43B

Business deduction under section 36(1)(va) - Employees' contributions to PF and ESI - Paid before due date of filing of return under section 139(1) -

CPC made an adjustment of employees' contributions to PF and ESI on the ground that assessee-company did not remit the employees' contributions to PF and ESI within the due dates specified under respective Acts. On appeal, the assessee submitted before CIT(A) that it remitted the employees' contributions to PF and ESI before the due date of filing of return under section 139(1), thus, it was entitled to deduction of the same. However, the CIT(A) upheld the disallowance relying on amendment brought about by Finance Act, 2021 to sections 36(1)(va) and 43B. Held: In view of decision of Tribunal in the case of M/s. The Continental Restaurant & Café Co. v. The ITO [ITA No. 388/Bang/2021 Order dated 11-10-2021] : 2021 TaxPub(DT) 6000 (Bang-Trib), amendment made to sections 36(1)(va) and 43B by Finance Act, 2021being effective from 1-4-2021 will apply for and from assessment year 2021-22 onwards. Thus, the said amendment would not have application for relevant assessment year, i.e. 2018-19. Accordingly, AO was directed to grant deduction in respect of employees' contributions to PF and ESI since assessee made the payment of the same before the due date of filing of return under section 139(1).

Followed:M/s. The Continental Restaurant & Café Co. v. The ITO [ITA No. 388/BANG/2021 Order dated 11-10-2021] : 2021 TaxPub(DT) 6000 (Bang-Trib)

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2018-19

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