TMI Blog2021 (12) TMI 691X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income u/s 139(1) of the I.T.Act. It was further held by the ITAT that amendment by Finance Act, 2021, to section 36[1][va] and 43B of the Act is not clarificatory. The amended provisions of section 43B as well as 36(1)(va) of the I.T.Act are not applicable for the assessment year under consideration.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. - ITA No. 426/Bang/2021 - - - Dated:- 11-11-2021 - Shri George George K, JM And Shri B.R.Baskaran, AM Appellant by : Sri. B. S. Balachandran, Advocate Respondent by : Smt. Priyadarshini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been disputed by the Ld C!T(A) or Ld AO . 6. The Ld C!T(A) and the Ld AO erred in not appreciating that the issue was covered by the decisions of the Hon'ble Karnataka High Court in the case of CIT v Shabar Enterprises (2008) 298 ITR 141 (Kar), CIT v Spectrum Consultants India Pvt t.tc (WA No.4077/2013), Essae Teraoka Pvt Ltd v OCIT (ITA No.480/2013); 7. The Ld CITCA) erred in holding that the employees contribution to PF and ESI were covered by section 43B of the Act relying on the Explanation 5 to section 43B inserted by the Finance Act, 2021 with effect from 01 April 2021. 8. The Ld CITCA) erred in giving a retrospective effect to Explanation 5 to section 43B without appreciating that the Legislature in the Memoran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Act by assessing a sum of ₹ 1,42,05,697. The reason for the difference between the returned income and the assessed income u/s 143(1) of the I.T.Act was on account of disallowance of sum of ₹ 5,49,303 being late remittance of employees contribution to PF and ESI under the respective Acts. 4. Aggrieved by the intimation u/s 143(1) of the I.T.Act, the assessee preferred an appeal before the first appellate authority. It was stated that the assessee had paid the employees contribution to PF and ESI prior to the due date of filing of the return u/s 139(1) of the I.T.Act. Therefore, it was submitted that the assessee is entitled to deduction of employees contribution to PF and ESI having regard to the provisions of section 43B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s 139(1) of the I.T.Act. It was further held by the ITAT that amendment by Finance Act, 2021, to section 36[1][va] and 43B of the Act is not clarificatory. The relevant finding of the ITAT in the case of M/s. Shakuntala Agarbathi Company Vs. DCIT (supra), reads as follows: 7. We have heard rival submissions and perused the material on record. 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. v. DCIT reported in 366 ITR 408 (Kar.) has categorically held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is made on or before the due date for furnishing the return of income under sub-section (1) of Section 139 of the IT Act is made, the employer is entitled for deduction. 21. The submission of Mr.Aravind, learned counsel for the revenue that if the employer fails to deduct the employees' contribution on or before the due date, contemplated under the provisions of the PF Act and the PF Scheme, that would have to be treated as income within the meaning of Section 2(24)(x) of the IT Act and in which case, the assessee is liable to pay tax on the said amount treating that as his income, deserves to be rejected. 22. With respect, we find it difficult to endorse the view taken by the Gujarat High Court. WE agree with the view t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had categorically held that the amendment to section 36[1][va] and 43B of the Actby 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 Transformation Private Limited v. DCIT in ITA No.307/Bang/2021 (order dated 11th October, 2021) 7.3 In view of the aforesaid reasoning and the judicial pronouncements cited supra, the amendment by Finance Act, 2021 to Sec.36[1][va] and 43B of the Act will not have application to relevant a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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