Case Details: Salzgitter Hydraulics (P.) Ltd. v. ITO
The assessee filed the appeal against the order of the Commissioner of Income-tax (Appeals) [CIT(A)]. Assessee-company had contended that the CIT(A) erred in sustaining the addition on account of employees’ contribution to PF & ESI without considering that they were paid before the due date of filing the return of income (ITR). In contrast, AO’s stand was that the sum paid after the due date prescribed in the corresponding statutes should not be allowed as a deduction.
It should be noted that the legislature has incorporated necessary amendments in Sections 36(va) and Section 43B, vide Finance Act, 2021. Thus, after the amendment, the deduction of an employee’s contributions to ESI/PF is allowed only if the same is paid within the due date prescribed in corresponding statutes.
The memorandum explaining the Finance Bill, 2021 has stated that the given amendments are effective from 01-04-2021. Thus, it can be concluded that amendments are clarificatory and are applicable only with prospective effect from 1-4-2021.
