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TMI Blog2021 (12) TMI 1168X X X X Extracts X X X X X X X X Extracts X X X X ..... ) dated 27.09.2021, upholding the intimation dated 16.10.2019 passed u/s. 143(1) of the Income-tax Act, 1961 (Act) by the Deputy Commissioner of Income Tax, Centralized Processing Centre, Bangalore (DCIT-CPC) is without jurisdiction and is opposed to the principles of law, weight of evidence, probabilities, equity, natural justice, fair play and the facts and circumstances of the case of the appellant. 2. That the ld. CIT(A) erred in confirming the addition of Rs. 2,63,48,317/- made by the DCIT, CPC u/s. 36(1)(va) r.w.s. 2(24)(x) of the Act in respect of employees contribution to PF and ESI deposited beyond the due date of the respective legislation but before the due date for filing the return of income u/s. 139(1) of the Act. 3. That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave appreciated that the amendment in section 36(1)(va) is not applicable to the impugned assessment year. 6. That the Ld. CIT(A) ought to have appreciated that the issue whether employees contribution deposited before the due date of filing the return of income u/s. 139(1) is allowable or not is debatable. Further, the amendment in section 36(1)(va) whether retrospective or prospective is also debatable. Being so, the adjustment in respect of the same cannot be made u/s. 143(1) of the Act. 7. That the Ld. CIT(A) erred in not appreciating that when two views are possible, the view favourable to the assessee should be adopted. Accordingly, erred in not holding that belated remittance of employees contribution to PF and ESI amounting to R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional 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 submitted that an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 substantial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 jurisdictional High Court in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 made by the Assessing Officer is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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