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2021 (10) TMI 1196 - ITAT BANGALORE
Addition u/s 36(1)(va) - employees' contribution to ESI before the due date for filing of return u/s. 139(1) - HELD THAT:- Admittedly, the assessee has remitted the employees' contribution to ESI before the due date for filing of return u/s. 139(1) of the I.T. Act. The Hon'ble jurisdictional High Court in the case of Essae Teraoka (P.) Ltd. [2014 (3) TMI 386 - KARNATAKA HIGH COURT] has categorically held that the assessee would be entitled to deduction of employees' contribution to ESI provided the payment was made prior to the due date of filing of return of income u/s. 139(1).
Whether the amendment to section 36(1)(va) and 43B of the I.T. Act by Finance Act, 2021 is clarificatory and declaratory in nature? - Supreme Court in the recent judgment in the case of M.M. Aqua Technologies Limited v. CIT [2021 (8) TMI 520 - SUPREME COURT] had held that retrospective provision in a taxing Act which is "for the removal of doubts" cannot be presumed to be retrospective, if it alters or changes the law as it earlier stood - 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 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.
The amendment by Finance Act, 2021 to Sec. 36(1)(va) and 43B of the I.T. Act will not have application to relevant assessment year, namely A.Y. 2019-2020. Accordingly, we direct the A.O. to grant deduction in respect of employees' contribution to ESI since the assessee has made payment before the due date of filing of the return of income u/s. 139(1) - Decided in favour of assessee.