ESI DISALLOWANCE

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Pooja (Querist)
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12 December 2019 Respected Sir/Medam,
I have received notice u/s 143(1) in which Department was disallowed payment of ESI due to paid after Due date of Payment. But sir we paid that amount before Due date of filling of Income Tax Return as per section 139(1) so it should be allowed as per requirment of section 43B.
kindly guide me sir on above issue what I need to do.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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12 December 2019 If it is Employees contribution towards ESI , rightly disallowed by AO u/s 36(1)(va)
as payment was made beyond the due date stipulated under the relevant
enactment for making such payment.

Pooja

Pooja (Querist)
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12 December 2019 SIR, What about section 43B deduction, Whether its fall under this section or not.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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12 December 2019 Yes it will fall
Selva Gold Covering Pvt. Ltd., ... vs Dcit, Coimbatore on 25 November, 2019

IN THE INCOME TAX APPELLATE TRIBUNAL
'D' BENCH: CHENNAI
Tribunal has rightly relied on the decision of the Supreme Court in the case of CIT V. Alom Extrusions Ltd. reported in 319 ITR 306, whereby, the Supreme Court held that omission of second proviso to Section 43B and amendment to first proviso by Finance Act, 2003 are curative in nature and are effective retrospectively, i.e., with effect from 1.4.1988 i.e., the date of insertion of first proviso. The Delhi High Court in the case of CIT V. Amil Ltd. reported in 321 ITR 508 held that if the assessee had deposited employee's contribution towards Provident Fund and ESI after due date as prescribed under the relevant Act, but before the due date of filing of return under the Income Tax Act, no disallowance could be made in view of the provisions of Section 43B as amended by Finance Act, 2003.
In the present case, the assessee had remitted the employees contribution beyond the due date for payment, but within the due date for filing the return of income. Hence, following the above-said decisions, we find no reason to differ with the findings of the Tribunal.

Pooja

Pooja (Querist)
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12 December 2019 Sir, I give all that references to the department in response of notice but still they disallowed it. Now what I do further.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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12 December 2019 Go for appeal we have gone for appeal in such a case.

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