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2021 (11) TMI 926 - AT - Income TaxContribution of employees’ share towards ESI, PF, Superannuation Fund or any other fund set up for the welfare of the employee u/s 36(1)(va) read with Section 2(24)(x) when the payments were made within the due dates of filing of return u/s 139 - whether the amendment brought in by Finance Act, 2021, is retrospective or prospective in operation? - HELD THAT:- When we adjudicate whether the view of Ld CIT(A) that the explanation 2 brought in by Finance Act, 2021 is retrospective, let us look at the “Notes on Clauses and the relevant clauses 8 & 9 of the Finance Bill, 2021 (supra) pertaining to the issue in hand which in clear and unambiguous terms spells out the intention of Parliament that the amendment shall take effect from 1st April, 2021 and therefore will accordingly apply to Assessment Year 2021-22 and subsequent years. So since the legislative intent is clear, the amendment brought in by Finance Act, 2021 on this issue as discussed is prospective and Ld. CIT(A) erred in holding otherwise. So till AY 2021-22, the Jurisdictional High Court’s view in favor of assessee will hold good and is binding on us. As relying on the ratio of the Hon’ble Supreme Court in the case of Vatika Township Pvt. Ltd. [2014 (9) TMI 576 - SUPREME COURT] and M/s Snowtex Investment Ltd. [2019 (5) TMI 1165 - SUPREME COURT] and also taking note of the binding decision of the Hon’ble Jurisdictional Calcutta High Court on this issue before us in Shri Vijayshree Ltd. Ltd.[2011 (9) TMI 30 - CALCUTTA HIGH COURT] M/s Coal India Ltd [2015 (8) TMI 1451 - CALCUTTA HIGH COURT], M/s Akzo Nobel India Ltd. [2016 (6) TMI 1128 - CALCUTTA HIGH COURT], we set aside the impugned order of Ld CIT(A) and direct the AO to allow the claim of deduction in respect of employees contribution shares towards ESI, PF, by the assessee before the due date of filing of return u/s 139(1) of the Act. Therefore the appeal of assessee succeeds and so, it is allowed in favor of assessee. Disallowance u/s 14A - HELD THAT:- Since there is no dispute that assessee did not earn any exempt income, we are of the view that no disallowance u/s 14A of the Act was warranted. For taking such a view, we rely on the decision of the Hon’ble Delhi High Court in Chem Investments [2015 (9) TMI 238 - DELHI HIGH COURT] - Therefore we direct the deletion of the addition /disallowance made by the AO in this regard. Disallowing expenditure incurred on educational sponsorship of assessee company’s Director’s son - HELD THAT:- Since in the present case there is a nexus with expenses incurred for the higher education of Shri Jay Goel with the business of the assessee company and the recipient of sponsorship has later joined the services of assessee company and is discharging the duties as CEO of the assessee company, the expenditure incurred should be allowed since it has nexus with the business of the assessee. This ground of the assessee stands allowed. Accrual of income - retention money retained by the debtors during the relevant previous year - taken into account while computing the profits and gains of the assessee’s business for the assessment year under consideration - HELD THAT:- Since we note that the retention money kept with the Electricity Board which would be released latter only once the assessee fulfills all the obligations under the contract then only the assessee would acquire the right to receive such retention money so this is contingent in nature, so the amount in question cannot be held to have been accured to the assessee and since on facts the assessee has not received the same, even by applying the concept of real income theory, the money retained by the Electricity Board cannot be brought to tax. Thus, we note that in this year under consideration, since no enforceable liability has accrued or arisen, so, it cannot be said that the assessee had any vested right to receive the retention money in question. Assessee had no right to claim any part of the retention money till the verification of the satisfactory execution of the contract is over. Therefore, in this assessment year the retention money retained by the electricity Board cannot be treated as income of the assessee and even though the assessee due to mistake of fact has offered the same as income this year in its Return of Income, deduction of the same should be given and since the decision of the Hon’ble Supreme Court in M/s Goetz India Goetz India [2006 (3) TMI 75 - SUPREME COURT] does not come in the way of the Tribunal as held by the Hon’ble Supreme Court as noted (supra), so we set aside the impugned order of Ld CIT(A) and direct the AO to give relief to the assessee on this issue. However, it is clarified that when the assessee receives or when this amount accrues to the assessee, then it should be taxed in that assessment year and not in this assessment year - Decided in favour of assessee.
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