TMI Blog2021 (12) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be entitled to deduction of employees contribution 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). As the amended provisions of section 43B as well as 36(1)(va) of the I.T.Act are not applicable for the assessment years under consideration - 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 - ITA No.430/Bang/2021 - - - Dated:- 23-12-2021 - Shri George George K, JM And Shri B.R.Baskaran, AM For the Appellant : Sri.Ravi Shankar, Advocate For the Respondent : Smt.Priyadarshini Besaganni, JCI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned assessment year. 6. The learned Commissioner of Income Tax (Appeals) failed to appreciate that the Explanation 5 to Section 43B of the Act, inserted by the Finance Act, 2021 is applicable prospectively and consequently cannot be invoked for the impugned assessment year. 7. The learned Commissioner of Income Tax (Appeals) failed to appreciate that the appellant has remitted all the amounts before the due date of filing the return of income under Section 139(1) of the Act and consequently no disallowance can be made under section 36(1)(va) of the Act on the facts and circumstances of the case. 8. The learned Commissioner of Income Tax (Appeals) failed to follow the decisions of the Hon'ble Apex Court and the Jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to PF and ESI under the respective Acts. The assessee filed a rectification application u/s 154 of the I.T.Act to CPC. The CPC rejected the rectification application vide order dated 10.07.2020. 4. Aggrieved by the order of CPC rejecting the rectification application, 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 of the I.T.Act. In this context, the assessee relied on the judgment of the Hon ble juri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 that the assessee would be entitled to deduction of employees' contribution to ESI provided the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 taken by this Court in W.A.No.4077/2013. 23. In the result, the appeal is allowed and the substantial q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 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 assessment year, namely A.Y. 2019- 2020. Accordingly, we direct the A.O. to grant deduction in respect of empl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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