Relief to Google: ITAT allows the Deduction of ESI/PF Contributions paid after the Due Date
The Bangalore bench of the ITAT has granted relief to Google India by allowing deduction section 43B as well as 36(1)(va) of the Income Tax Act in respect of ESI/PF contributions paid after the due date.
The assessee, Google India had paid the employees’ contribution to PF and ESI prior to the due date of filing of the return u/s 139(1) of the Income Tax Act claiming that they are entitled to a deduction of employees’ contribution to PF and ESI having regard to the provisions of section 43B of the Income Tax Act.
The assessee further relied on the judgment of the Hon’ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT. The CIT(A), however, rejected the appeal of the assessee observing the difference between employer and employee contribution to PF and ESI and held that only employers’ contribution to PF and ESI is entitled to deduction u/s 43B of the Income Tax Act if the same is paid prior to the due date of filing of return of income u/s 139(1) of the Act.
Relief to Google: The case of Essae Teraoka Pvt. Ltd Vs. DCIT
The Tribunal bench comprising Shri Chandra Poojari, AM & Smt.Beena Pillai, JM held that on identical facts, the Bangalore Bench of the Tribunal in the case of M/s. Shakuntala Agarbathi Company Vs. DCIT (supra) by following the dictum laid down by the Hon’ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT (supra)¸ had held that the assessee would be entitled to the 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 u/s 139(1) of the I.T.Act.
The bench further noted that the Tribunal held that the amendment by the Finance Act, 2021, to sections 36[1][va] and 43B of the Act is not clarificatory.
“Therefore, the amended provisions of section 43B, as well as 36(1)(va) of the I.T.Act, are not applicable for the assessment years under consideration. By following the binding decision of the Hon’ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT (supra), the employees’ contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the I.T.Act is an allowable deduction.
Accordingly, we decide this issue in favor of the assessee, and the disallowance made by the Assessing Officer is deleted,” the Tribunal said.
Relief to Google- ITAT allows Deduction of ESI: PF Contributions paid after Due Date