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TMI Blog2022 (2) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... herwise this section should be read as " any sum payable by the assessee as an employer by way of his contribution ..." Further is section 2(c) of the THE EMPLOYEES" PRO IDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 define the word "contribution" means a contribution payable in respect of a member under a Scheme 4 [or the contribution payable in respect of an employee to whom the Insurance Scheme applies];. Further as per Rule 26A of The Employees' Provident Funds Scheme, 1952, the contribution shall be payable to the Fund in respect of both by the employer. Rule 29 of the scheme describes about the amount of contribution employer as well as employee Further Rule 30 of the Scheme provides that the employer shall, in the first instance, pay both the contribution payable by himself (employer as well as employee). Thus there should be no confusion about the interpretation in favour of the assessee with regard to the contributions made to the respective funds of ESI and PF on or before the due dates mentioned U / s 139(1) as mandated U/s 43B. Accordingly, these additions made under these heads needs to be deleted. 2. It is also submitted that as per the jurisdiction High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum payable by the assessee as an employer by way of contribution to any fund such as provident fund shall be allowed if it is paid on or before the due date as contemplated under Section 139(1) of the In come- Tax Act. This provision has nothing to do with the consequences, provided for under the PF Act/PF Scheme/ESI Act, for not depositing the "contribution" on or before the due dates therein." Further in the same judgement It also said that the word "contribution" used in clause (b) of Section 43B of Act 1961 means the contribution of employer and employee, both, and that being so, if contribution is deposited on or before due date for furnishing Return of income under subsection (1) of Section 139 of Act 1961, employer is entitled for deduction. (emphasis applied.) 4. It is also further submitted that, as per the ratio of THE COMMISSIONER OF INCOME TAX Vs. GHATGE PATIL TRANSPORTS LTD. BOMBAY HIGH COURT (2014) 368 ITR 749 (Bom.): October 14, 2014, its been held that the employer assessee would be entitled to deduction only if the contribution to the employee's welfare fund stood credited on or before the due date and not otherwise - following the decision in Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Asst. year 2019-20. Hence the opinion formed and judgement based on such opinion by the Ld. JCCT Appeals is grossly bad in law and not legally enforceable. 7. It is further submitted that the said insertion of explanation is prospective in nature and it cannot be retrospective It cannot have the retrospective effect. As per the well settled prudent jurisprudence when the provision is inserted it assumes only the prospective effect not the retrospective effect unless it is explicitly provides as such. Whereas in the explanations to 36(1)(va) and 43B is silent on retrospective effect and it doesn't provide an thing to presume retrospective applicability. Same view has been expressed in the case of Gopalakrishna Ashwini Kumar Vs ACIT, CPC, ITA o. 359/Bang/2021 the honourable bench has opined that "explanatory memorandum to the Finance Act, 2021 proposing amendment in section 36(1)(va) as well as section 43B is applicable only from 01.04.2021. These provisions impose a liability on an assessee and therefore cannot be construed as applicable with retrospective effect unless the legislature specifically says so. In the decisions referred to by us in the earlier paragraph of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 have heard rival submissions and perused the material on record. 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 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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