TMI Blog2021 (12) TMI 1168X X X X Extracts X X X X X X X X Extracts X X X X ..... F 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 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 [ 2014 (3) TMI 386 - KARNATAKA HIGH COURT] 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 thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht to have appreciated that the second proviso to section 43B of the Act which provided for the disallowance of delayed payments of employees contribution was specifically omitted w.e.f. 1.4.2004 and hence making it clear that there is no distinction between the employer and employees contribution. Accordingly, the ld. CIT(A) erred in not appreciating that the sum of ₹ 2,63,48,371/- deposited before the due date for filing the return of income u/s. 139(1) of the Act is an allowable deduction u/s. 43B. 4. That the Ld. CIT(A) erred in not following the judgment of the Hon'ble Supreme Court rendered in the case of CIT v. Alom Extrusions SC 319 ITR 306, wherein the Hon'ble Supreme Court had clearly held that if employees cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 2,63,48,317/- is an allowable deduction in the hands of the appellant. 8. That the appellant craves for the permission of the Hon'ble Income Tax Appellate Tribunal to add, delete or amend the grounds of appeal hereinabove before or during the course of hearing of the instant appeal. 3. All these grounds are directed against a single issue, viz., disallowance of employees contribution to PF and ESI. The facts relating to the said issue are that for the assessment year 2018-2019, return of income was filed on 13.10.2018, declaring income of ₹ 8,96,18,162. The assessee was served with an intimation u/s. 143(1) of the I.T. Act determining total income at ₹ 11,59,66,479. The reason for the difference between the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed AR submitted that an identical issue was decided in favour of the assessee by the Tribunal in the case of M/s. Shakuntala Agarbathi Company Vs. DICT in ITA No. 385/Bang/2021 (order dated 21.10.2021). 6. The learned Departmental Representative supported the orders of the Income Tax Authorities. 7. We heard both parties and perused the records. On identical facts, the Bangalore Bench of the Tribunal in the case of M/s. Shakuntala Agarbathi Company Vs. DCIT (supra) by following the dictum laid down by the Hon'ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd. Vs. DCIT (supra), had held that the assessee would be entitled to deduction of employees' contribution to PF and ESI provided that the payments were mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1 In deciding the above substantial question of law, the Hon'ble High Court rendered the following findings:- 20. Paragraph-38 of the PF Scheme provides for Mode of payment of contributions. As provided in sub para (1), the employer shall, before paying the member, his wages, deduct his contribution from his wages and deposit the same together with his own contribution and other charges as stipulated therein with the provident fund or the fund under the ESI Act within fifteen days of the closure of every month pay. It is clear that the word contribution used in Clause (b) of Section 43B of the IT Act means the contribution of the employer and the employee. That being so, if the contribution is made on or before the due date for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the Hon'ble jurisdictional High Court in the case of Essae Teraoka (P.) Ltd. v. DCIT (supra) the assessee would have been entitled to deduction of employees' contribution to ESI, if the payment was made prior to due date of filing of the return of income u/s. 139(1) of the I.T. Act. Therefore, the 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 following orders of the Tribunal had categorically held that the amen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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