TMI Blog2022 (2) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, we decide this issue in favour of the assessee and the disallowance made by the Assessing Officer is deleted. - Decided in favour of assessee. - ITA No.662/Bang/2021 - - - Dated:- 31-1-2022 - Shri George George K, JM And Ms.Padmavathy S, AM For the Appellant : Sri.S.Annamalai, Advocate For the Respondent : Smt.Priyadarshini Besaganni, JCIT-DR ORDER PER PADMAVATHY S, AM : This appeal at the instance of the assessee is directed against the CIT(A) s order dated 08.10.2021. The relevant assessment year is 2018-2019. 2. The grounds raised read as follows:- 1. The impugned order of the learned Commissioner of Income-tax (Appeals)-11, Bengaluru, Karnataka passed under Section 250 of the Income Tax Act, 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wards and not applicable to the impugned assessment year and consequently the appellant is entitled for deduction on the facts and circumstances of the case. 6. The learned Commissioner of Income Tax (Appeals) erred in corning to a conclusion that the relief sought by the appellant did not fall within the scope of section 154 of the Act on the facts and circumstances of the case. 7. The learned Commissioner of Income Tax (Appeals) failed to appreciate that all the payments made before the due date of filing the return of income under Section 139(1) of the Act and consequently the employee contribution to Provident fund and ESI fund is an allowable deduction in the hands of the appellant on the facts and circumstances of the case. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith an intimation u/s 143(1) of the I.T.Act by assessing a sum of ₹ 1,57,24,680. 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 ₹ 64,13,660 being late remittance of employees contribution 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 27.02.2020. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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) 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 report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and the employee. That being so, if the contribution 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22 onwards. The following orders of the Tribunal 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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