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2022 (1) TMI 242 - AT - Income TaxDisallowance of employees contribution to PF & ESI u/s.36(1(va) r.w.s. 2(24)(x) - Scope of amendment - HELD THAT:- We find that amendment brought to the statute by insertion of Explanation 1 to section 36(1(va) by the Finance Act, 2021 w.e.f. 01.04.2021 is considered to be prospective in nature as per the decision of the co-ordinate Bench of ITAT., Chennai [2021 (12) TMI 558 - ITAT CHENNAI], where it was held that insertion of Explanation 1 to said section cannot be considered as retrospective in nature and thus, belated payment of employees contribution to PF & ESI after due date specified under respective Act, but before due date for filing of return of income u/s.139(1) of the Act is allowable deduction. We direct the Assessing Officer to delete additions made towards disallowance of employees contribution to PF & ESI u/s.36(1(va) r.w.s. 2(24)(x) of the Act for both assessment years. Disallowance of expenses relatable to exempt income u/s.14A r.w. Rule 8D - absence of exempt income - HELD THAT:- Hon'ble Jurisdictional High Court of Madras in the case of M/s. Redington India Ltd. [2017 (1) TMI 318 - MADRAS HIGH COURT] had considered identical issue and held that in absence of exempt income, no disallowance can be made towards expenses relatable to said exempt income. In this case, facts borne out from records clearly show that there is no exempt income for both assessment years, and hence, the AO cannot compute disallowance of expenses relatable to said exempt income. Accordingly, we direct the AO to delete additions towards disallowance u/s.14A read with Rule 8D of Income Tax Rules, 1962, for both assessment years.
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