TMI Blog2021 (12) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... he ITAT that amendment by Finance Act, 2021, to section 36[1][va] and 43B of the Act is not clarificatory. Employees contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the I.T.Act is an allowable deduction. Accordingly, we decide this issue in favour of the assessee and the disallowance made by the AO is deleted. - Decided in favour of assessee. - ITA No. 565/Bang/2021 - - - Dated:- 16-12-2021 - Shri N. V. Vasudevan , Vice-President And Shri Chandra Poojari , AM Appellant by : Sri.Kusuma Yathish, CA Respondent by : Sri.Sankar Ganesh K, Joint CIT-DR ORDER Per Chandra Poojari, AM : This appeal at the instance of the assessee is directed against the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting that the provisions of Section 43B overrides Section 36(1)(va) and that disallowance under Section 36(1)(va) was applicable only if the said contributions are not remitted within the due date as specified in Section 139(1) as against the due date specified in the law under which remittance was required to be made and that all amounts having been remitted within due date prescribed by Income-tax Act,1961 should be eligible for claim of deduction consequent to removal of proviso to section 43B of the Act. e) The ld.CIT(A) erred in not considering the factual backdrop that the legislature has not only incorporated necessary amendments in Section 36(1)(va) as well as 43B made vide Finance Act, 2021 to this effect but also the CBDT ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of the Hon ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT, reported in 366 ITR 408 (Kar.). The CIT(A), however, rejected the appeal of the assessee. The CIT(A) noticed the difference between employer s and employees contribution to PF and ESI and held that only employer s contribution to PF and ESI is entitled to deduction u/s 43B of the I.T. Act, if the same is paid prior to due date of filing of return of income u/s 139(1) of the Act. It was further held that the amendment to section 36(1)(va) and 43B of the I.T. Act made by Finance Act, 2021 is clarificatory in nature and hence they will have retrospective operation. 5. Aggrieved, assessee has filed this appeal before the Tribunal. The learned AR sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribution to ESI provided the payment was made prior to the due date of filing of return of income u/s 139(1) of the I.T.Act. The Hon'ble jurisdictional High Court differed with the judgment of the Hon'ble Gujarat High Court in the case of CIT v. Gujarat State Road Transport Corporation reported in 366 ITR 170 (Guj.). The Hon'ble High Court was considering following substantial question of law:- Whether in law, the Tribunal was justified in affirming the finding of Assessing Officer in denying the appellant's claim of deductions of the employees contribution to PF/ESI alleging that the payment was not made by the appellant in accordance with the provisions u/s 36[1][va] of the I.T.Act? 7.1 In deciding the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal is allowed and the substantial question of law framed by us is answered in favour of the appellant-assessee and against the respondent-revenue. There shall be no order as to costs. 7.2 The further question is whether the amendment to section 36[1][va] and 43B of the Act by Finance Act, 2021 is clarificatory and declaratory in nature. The Hon'ble Supreme Court in the recent judgment in the case of M.M.Aqua Technologies Limited v. CIT reported in (2021) 436 ITR 582 (SC) 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 (page 597). In this case, in view of the judgment of the Hon'ble jur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct 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) of the I.T.Act, It is ordered accordingly. 7.1 Therefore, 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. By following the binding decision of the Hon ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT (supra), the employees contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the I.T.Act is an allowable deduction. Accordingly, we decide this issue in favour of the assessee and the disallowance mad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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