TMI Blog2022 (5) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 2021-22 and subsequent years and not retrospectively. Thus, in view of this legal position, as considered by the Co-ordinate Benches and duly taking note of the judgements of the jurisdictional High Court in the case of CIT Vs Nuchem Limited.[ 2010 (2) TMI 959 - PUNJAB AND HARYANA HIGH COURT] we are of the view that the additions cannot be made or sustained on the strength of the amendment effected by Finance Act, 2021 to Sections 36(1)(va)/43B of the Act as the legal position thereon is very clear. The departmental stand that it is clarificatory in nature has consistently been rejected. Thus, in the face of the clear legal position, we find that the claim of the assessee is to be allowed. We are bound by the law laid down by the Hon'ble Punjab and Haryana High Court in the case of CIT Vs. Hemla Embroidery Mills (P) Ltd. [ 2013 (2) TMI 41 - PUNJAB AND HARYANA HIGH COURT] wherein it was categorically held that the respondent - assessee was entitled to deduction in respect of employer and employee's contribution to ESI and Provident Fund as the same had been deposited prior to the filing of the return u/s. 139(1) - Decided in favour of assessee. - ITA N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25. 10. 2021 9. 14/ Chd/2022 Assessee 03. 12. 2021 10. 15/ Chd/2022 Assessee 03. 12. 2021 11. 78/ Chd/2022 Assessee 22. 12. 2021 12. 16/ Chd/2022 Assessee 23. 12. 2021 1.1. Since these appeals involved an identical question, they were heard in a bunch on two separate dates and they are being disposed off by this common order for the sake of convenience. 1.2. For the sake of convenience, the grounds taken by the various parties in their respective appeals/cross objection are being reproduced herein under:- 2. ITA No. 18/Chd/2022: 1. That the Ld. CIT(A) erred in law, in deleting addition/disallowance of Rs. 1,01,770/- made by the Assessing Officer in respect of delayed payment of employee's contribution, beyond the prescribed time, to the welfare Funds like PF. 1(a) That the Ld. CIT(A) erred on facts and law ignoring the distinction be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the due date and the amendment regarding insertion of explanation 2 in section 36(1)(va) and explanation 5 in section 43B in the Finance Bill 2021 is with prospective effect. 4. That the Appellant craves for leave to add, modify amend or delete any of the grounds of appeals at the time of hearing and all the above grounds are without prejudice to each other. 2.3. ITA No. 31/Chd/2022 1. That the impugned Order is bad in law, since it has been passed as it has been passed without giving any opportunity to the appellant to present his case. 2. It is settled law before the amendments were made by the Finance Act 2021, that no disallowance can be made under section 36 (1) (va) of the Act, when the assessee has deposited the amount of ESI before due date of filling the return of Income. 3. That the Ld. CIT Appeals has wrongly interpreted the provisions of Finance Act 2021 with regard to clause (va) of sub-section (1) of the section 36 of the Act, since the amendments are not applicable from retrospective effect. 4. That the appellant craves leave to amend, alter or delete any of the above grounds of appeal. Any other relief as Your Honour may deem fit a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereas employee's contribution is disallowed for once and all if payment is delayed beyond the prescribed time. 1(b) That the Ld. CIT(A) erred in ignoring and failing to take into account the amendment carried out by Finance Act, 2021 by way of inserting Explanation 1 Explanation 2 below section 36(1)(va) of the Act which has been interpreted by the Hon'ble Appellate Tribunal, Delhi Bench in M/s. Vedvan Consultants Pvt. Ltd., New Delhi ITA No. 1312/Del/2020 dated 26.08.2021 which was held that the aforesaid explanation was clarificatory. 2. That the Ld. CIT(A) erred in ignoring the Circular No. 22/2015 issued by the CBDT. 2.7. C.O. No. 1/Chd/2022 (arising in ITA 418/Chd/2021) 1. That the Ld. ITO, Ludhiana has erred in law and on the fact of the case while making disallowance of Rs. 46922/- against the payment of PF and added back to the taxable income. 2. That the respondent craves leave and sanction to file additional evidence, if so, required for proper prosecution of the case, based on facts and circumstances, which has not been or could not be adduced or filed before the lower authorities either because proper and sufficient opportunity/time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of judicial consistency as held by the Hon'ble Supreme Court in various cases. 4. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off. 2.11 ITA No. 16/Chd/2022: 1. The Ld. CIT(A) has wrongly confirmed the addition of Rs. 452475/- under section 36, when in fact the actual ESI and EPF payments were made before the due date of filing the ITR as per challans submitted before CIT(A) and several judicial pronouncements are in favour of the assessee. 2. Any other ground of grounds as may be urged at the time of hearing. The appellant craves leave to add, amend, alter vary and/or withdraw any or all the above grounds of appeal. 3. At the request of the Ld. Sr. DR, the case bearing ITA No. 18/Chd/2022 in the case of DCIT, Central Circle, Patiala Vs. Smt. Madhubala for assessment year 2019-20 was taken as the lead case. The Ld. Authorised Representatives (ARs) representing the assessees had no objection to the same. 4. The Ld. Sr. Departmental Representative (Sr. DR) submitted that the sole issue in these bunch of appeals is whether employees' contribution to Provident Fund depos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h means the date by which the assessee is required as an employer to credit employee's contribution to the employees' account in the relevant fund under any Act or Rule or Order or Notification issued thereunder or any standing order or award or service or otherwise. She argued that, therefore, in case, where the employer fails to deposit the entire amount towards employee's contribution on account of PF and ESI with the concerned department on or before the due date under PF and ESI Acts, the assessee shall not be entitled for deduction to that extent. She underlined that according to the Employees Provident Funds Scheme of 1952, all payments owed to employees regarding wages for a given month must be paid within 15 days of the month's end. 4.4. The Ld. DR further argued that provisions of Section 36(1) (va) of the Act are very clear and unambiguous. There is no scope for liberal interpretation or for that matter interpretation at all when the law is stated in clear and unambiguous terms whatever the consequential effects be. The Ld. Sr. DR submitted that many assessees rely on the judgment of Hon'ble Supreme Court of India in the case of CIT v. Alom Extrusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee is entitled to deduction in respect of the sum belatedly paid towards such contribution, especially when such sum is, admittedly, a sum received by the assessee/employer from his employee. Therefore, for considering such question, application of section 36(1)(va) read with section 2(24)(x) alone is the proper course and any other interpretation would only defeat the object and scope of both the provisions viz., 43B (b) and 36(1)(va). 4.7. The Ld. Sr. DR further submitted that vide Finance Act 2021, the Government has further amended the law to bring certainty to the issue. She submitted that explanation to section 36(1)(va) has been added clarifying that provision of section 43B does not apply and is deemed to never have been applied for the purpose of determining the due date under this clause; and further section 43B has been amended by inserting Explanation 5 to the said section to clarify that the provisions of the said section do not apply and are deemed to never have been applied to a sum received by the assessee from any of his employees to which provisions of 2(24)(x) applies. This makes it amply clear that the provisions will be applied retrospectively bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income u/s. 139(1) of the Act, was an allowable expense. It was the contention of the Ld. ARs that in the captioned appeals, the respective assessees had deposited the employees contribution towards ESI and PF well before the due date of filing of the return of income u/s. 139(1) of the Act and that this fact of filing of return before the due date prescribed u/s. 139(1) of the Act was not in dispute. The Ld. ARs placed reliance on a plethora of orders of the various Benches of the Tribunal across the country as well as of jurisdictional High Court namely Hon'ble Punjab Haryana High Court. It was submitted that the Hon'ble Karnataka High Court, Hon'ble Delhi High Court, Hon'ble Rajasthan High Court, Hon'ble Patna High Court, Hon'ble Allahabad High Court and Hon'ble Gauhati High Court had ruled in favour of the assessee on the issue. Reliance was placed on the following judicial precedents laid down by the Hon'ble Punjab Haryana High Court:- a. CIT vs M/s. Mark Auto Industries Limited reported in 358 ITR 43 b. CIT vs M/s. Hemla Embroidery Mills Pvt. Ltd., ITA No. 16 of 2009 order dated 27.09.2012 c. CIT vs Nuchem Ltd., ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that in all the captioned appeals, the employees' contribution of ESI and PF had been deposited before the due date of filing of return u/s. 139(1) of the Act is not in dispute. It is seen that the said issue, as far as the present Forum is concerned, stands fully covered in favour of the assessees not only by the consistent orders of the various Benches of the ITAT across the country but also by the consistent orders of the Chandigarh Bench of the ITAT. It is seen that all along, the Co-ordinate Benches have held that the amendments to Sections 36(1)(va) and u/s. 43B of the Income Tax Act effected by the Finance Act, 2021 are applicable prospectively and not retrospectively. While coming to the said conclusion, the Benches have relied upon the Notes on Clauses at the time of introduction of the Finance Act, 2021 and have held that the amendment is applicable in relation to the assessment year 2021-22 and subsequent years and not retrospectively. Thus, in view of this legal position, as considered by the Co-ordinate Benches and duly taking note of the judgements of the jurisdictional High Court in the case of CIT Vs Nuchem Limited (ITA 323 of 2009) and CIT Vs Hemla Embroid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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