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2021 (5) TMI 1007 - AT - Income TaxAddition towards ESI and PF - addition relating to employees contribution to PF & ESI on the ground that the same was deducted but was not remitted into relevant fund within the due dates prescribed under the relevant acts though the same was paid before the due date for filing return of income - HELD THAT:- As decided in VALUE MOMENTUM SOFTWARE SERVICES PRIVATE LIMITED VERSUS DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-17 (2) , HYDERABAD [2021 (5) TMI 989 - ITAT HYDERABAD] we find no merit in the Revenue’s foregoing stand. We take note of the explanatory memorandum to the Finance Act, 2021 proposing amendment in both Section 36(va) as well as Section 43B by inserting corresponding Explanations that although the impugned employees provident fund comes under the former provision only, the same is applicable from 01-04-2021 onwards. Meaning thereby that the legislature itself has condoned the impugned default before 01-04-2021. We thus delete the impugned employees provident fund disallowance for this precise reason alone. Necessary computation to follow as per law - we direct the AO to delete the addition made towards PF & ESI in both the years under consideration. Accordingly, the ground raised on this issue in both the years is allowed. Addition u/s 14A - HELD THAT:- It is settled position of law that the provisions of section 14A can be applied to quantify the expenses in relation to exempt income. Since the exempt income is Nil, section 14A will not apply - in the case of Cheminvest Ltd. [2015 (9) TMI 238 - DELHI HIGH COURT] has held that section 14A will not apply where no exempt income is received or receivable during the relevant assessment year. We find that the investments were made and no exempt income was earned from the investment so made, the provisions of Section 14A will not applicable to the case of assessee. Therefore, following the said decision in the case of Cheminvest Ltd., (supra),we direct the AO to delete the addition made on this count.
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