PER N.K. SAINI, VICE PRESIDENT

The appeal filed by the assessee is directed against the order of the CIT(Appeal), National Faceless Appeal Centre, (NFAC) Delhi dated 23.06.2021.

2. The only issue involved in this appeal relates to the sustenance of the addition made by the Assessing Officer on account of late deposit of employees share of PF & ESI which were deposited after the due date but before the due date of filing of return of income. The Assessing Officer made the additions of the impugned amounts for the reasons that the assessees did not deposit the amounts of employees contribution as per the provisions of section 36(1)(va) of the Income Tax Act, 1961 (herein referred to as ‘the Act’). When the matter was taken to the Ld. CIT(A), he confirmed the action of the Assessing Officer by observing as under:-

“4.1 The submission of the appellant is considered. However, the same cannot be accepted in view of the amendments made to section 36 and 43B by the Finance Act, 2021. The Finance Act, 2021 has amended section 36, which reads as under-

"In section 36 of the Income-tax Act, in sub-section (1), in clause (va), the Explanation shall be numbered as Explanation 1 thereof and after Explanation 1 as so numbered, the following Explanation shall be inserted, namely: —

`Explanation 2.—For the removal of doubts, it is hereby clarified that the provisions of section 43B shall not apply and shall be deemed never to have been applied for the purposes of determining the "due date" under this clause;'."

The finance Act, 2021 has also amended section 43, as under- "In section 43B of the Income-tax Act, after Explanation 4, the following Explanation shall be inserted, namely:

"Explanation 5.—For the removal of doubts, it is hereby clarified that the provisions of this section shall not apply and shall be deemed never to have been applied to a sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 applies."

4.2 Thus, the Finance Act, 2021, has amended section 36 of the Income- tax Act, relating to other deductions. Sub-section (1) of the said section provides for allowing of deductions provided for in the clauses thereof for computing the income referred to in section 28 of the said Act. Clause (va) of the said sub-section provides for allowance of deduction for any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the due date. Explanation to the said clause provides that for the purposes of this clause, "due date" means the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued thereunder or under any standing order, award, contract of service or otherwise. By virtue of newly inserted Explanation 2 to clause (va) of sub-section (1) of the said section, the provisions of section 43B shall not apply and shall be deemed never to have been applied for the purposes of determining the "due date" under the said clause.

4.3 Section 43B of the Income-tax Act relates to allowing certain deductions only on actual payments. Clause (b) of the said section provides that any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year, in which such sum is actually paid by him. Proviso to the said section provides that nothing contained in this section shall apply in relation to any sum which is actually