INCOME TAX ACT, 1961

Section 36(1)(va)

Business deduction under section 36(1)(va) - Employees' contributions of PF - Deposited before due date of filing of return of income under section 139(1) -

AO made disallowance under section 36(1)(va) on account of late payment of employees' contributions of PF by assessee-company. On appeal, CIT(A) confirmed such disallowance on the ground that amendments in section 36(1)(va) brought in by Finance Act, 2021 was retrospective. Held: Assessee for various reasons could not deposit employees' contributions to PF within the time allowed under prescribed Act, however, it deposited the same before filing of return of income under section 139(1). Assessee complied with provisions of law and deposited the contributions before the due date of filling the return under section 139(1), which could not be disputed. Further, the fact remained that provisions/explanation to section 36(1)(va) was introduced by Finance Act, 2021, which was effective from 1-4-2021. The law was not framed/amended in relevant assessment year and any legal proposition, which casts additional burden/liability on the assessee, cannot be implemented retrospectively. Thus, the amendment to section 36(1)(va) would not be applicable to the assessment year under consideration being 2018-19. Since the assessee deposited the employees' contributions of PF before the due date under section 139(1); disallowance made under section 36(1)(va) on account of late payment of the employees' contributions of PF was accordingly, deleted.

REFERRED : M/s. BI Worldwide India Pvt. Ltd. v. DCIT in ITA No. 433/Bang/2021 dt. 4-1-2022, assessment year 2018-19 : 2022 TaxPub(DT) 0653 (Bang-Trib), Shri Satish Kumar Sinha v. ITO in ITA No. 293/Hyd/2021, assessment year 2019-20 order dt. 23-8-2021 : 2021 TaxPub(DT) 4863 (Hyd-Trib)

FAVOUR : In assessee's favour

A.Y. :

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