TMI Blog2022 (2) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... yments were made prior to the due date of filing of the return of income u/s 139(1) - Also further held by the ITAT that amendment by Finance Act, 2021, to section 36[1][va] and 43B of the Act is not clarificatory. Therefore, 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. By following the binding decision 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) is an allowable deduction - Decided in favour of assessee. - ITA Nos. 674 & 675/Bang/2021 - - - Dated:- 1-2-2022 - George George K., Member (J) And Padmavathy S., Member (A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dments were retrospective in operation under the facts and circumstances of the appellant's case. 4. The Learned NFAC ought to have appreciated that the aforesaid amendment by the Finance Act, 2021 cannot be regarded as retrospective in nature as they were not in the nature of beneficial legislation to remove intended hardship-cast on the assessee and therefore, the disallowance sustained on that basis is opposed to law and facts of the appellant's. 5. The Learned NFAC is not justified in refusing to follow the binding jurisdictional judgment of the Hon'ble Karnataka High Court rendered in the case of Essae Teraoka Private Ltd. Vs. DCIT (366 ITR 408) in favour of the assessee on the ground that the said judgment was re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals 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 jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd. Vs. DCIT, reported in 366 ITR 408 (Kar.). The CIT(A), however, rejected the appeals of the assessee. The CIT(A) noticed the difference between employer and employee contribution to PF and ESI and held that only employers contrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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