TMI Blog2022 (6) TMI 575X X X X Extracts X X X X X X X X Extracts X X X X ..... te the disallowance and allow the grounds of appeal in favour of the assessee. - ITA.NO. 95/MUM/2022 - - - Dated:- 23-5-2022 - Shri S. Rifaur Rahman, Hon'ble Accountant Member And Shri Rahul Chaudhary, Hon'ble Judicial Member For the Assessee : Shri Poojan Mehta For the Department : Shri Mehul Jain ORDER PER S. RIFAUR RAHMAN (AM) 1. This appeal is filed by the assessee against order of Learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter for short Ld. CIT(A)] dated 25.08.2021 for the A.Y.2019-20. 2. Assessee has raised following grounds in its appeal: - 1. On the fact and in the circumstances of the case and in law, the learned CIT(A) grossly erred in confirming the addition of Rs 45,80,864/on account of delay in deposit of employees contribution to Provident Fund and ESIC u/s. 2(24)(x) r.w.s. 36(1)(va) of the Income Tax Act, 1961 ( ITA) even when the same were paid before the due date of filing the return of income u/s. 139(1) of the ITA. 2. On the fact and in the circumstances of the case and in law, the learned CIT(A) failed to appreciate that the amendment to the Provisions to Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eads as follows:- 7. I have heard rival submissions and perused the material on record. Admittedly, the assessee has not remitted the employees' contribution of PF of Rs.1,06,190/- and ESI of Rs.16,055/- totaling to Rs.1,22,245/- before the due date specified under the respective Act. However, the assessee had paid the same before the due date of filing of the return u/s 139(1) of the I.T. Act. The Hon'ble jurisdictional High Court in the case of Essae Teraoka (P.) Ltd. v. DCIT reported in 366 ITR 408 (Kar.) has categorically held that the assessee would be entitled to deduction of employees' contribution to PF and ESI provided the payment was made prior to the due date of filing of return of income u/s 139(1) of the I.T.Act. The Hon'ble jurisdictional High Court differed with the judgment of the Hon'ble Gujarat High Court in the case of CIT v. Gujarat State Road Transport Corporation reported in 366 ITR 170 (Guj.). In holding so, the Hon'ble High Court was considering following substantial question of law:- Whether in law, the Tribunal was justified in affirming the finding of Assessing Officer in denying the appellant's claim of deductions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of the judgment of the Hon'ble jurisdictional High Court in the case of Essae Teraoka (P.) Ltd. v. DCIT (supra) the assessee would have been entitled to deduction of employees' contribution of PF and ESI if the payment was made prior to due date of filing of the return of income u/s 139(1) of the I.T.Act. Therefore, the amendment brought about by the Finance Act, 2021 to section 36(1)(va) and 43B of the I.T.Act, alters the position of law adversely to the assessee. Therefore, such amendment cannot be held to be retrospective in nature. Even otherwise, the amendment has been mentioned to be effective from 01.04.2021 and will apply for and from assessment year 2021-2022 onwards. The following orders of the Tribunal had categorically held that the amendment to section 36(1)(va) and 43B of the I.T.Act by Finance Act, 2021 is only prospective in nature and not retrospective. (i) Dhabriya Polywood Limited v. ACIT reported in (2021) 63 CCH 0030 Jaipur Trib. ii) NCC Limited v. ACIT reported in (2021) 63 CCH 0060 Hyd Tribunal. (iii) Indian Geotechnical Services v. ACIT in ITA No.622/Del/2018 (order dated 27.08.2021). (iv) M/s.Jana Urban Services for Transforma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due date as prescribed under section 36(1)(va) but such dues having been paid before the due date of filing of return of the income as prescribed under section 139(1), the amount is allowable as a deduction as per the provisions of section 43B. We find merit in the aforesaid submissions of the assessee. There are a number of judicial precedents on this issue wherein it is held that if the employees contribution to PF and ESI is paid within the due date of filing of return of income under section 139(1), then, the amount is allowable as a deduction in view of the provision of section 43B. In view of the afore said, we delete the addition of Rs.2,07,209 . 3.5.1. Similarly, Hon'ble Punjab Haryana High Court in the case of Pr.CIT Vs. Rajastan Beverages Corporation Ltd., (2017) [84 taxmann.com 173] held that no disallowance can be made in respect of PF and ESI u/s.36(1)(va) of the Act, if the same are deposited on or before the due date of filing the return of income. For the sake clarity and convenience we extract relevant part of the order of the Hon'ble Rajasthan High as under: 5. So far as the question relating to privilege fees amounting to Rs.26.00 Crores in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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