TMI Blog2020 (2) TMI 1619X X X X Extracts X X X X X X X X Extracts X X X X ..... at the payments 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 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 - Decided in favour of assessee. - ITA No. 567/Bang/2021 - - - Dated:- 8-2-2020 - Georg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed. 4. The learned CIT(A) has failed to follow the binding decision of the jurisdictional High Court and Supreme Court on the matter and wrongly disallowed Employee Contribution to PF and ESI amounting to ₹ 13,47,110 which is duly paid within the 139(1) due date. 4. Brief facts of the case are as follows: For the assessment year 2018-2019, the return of income was filed on 30.10.2018, declaring total income of ₹ 43,73,350. The assessee was served with an intimation u/s. 143(1) of the I.T. Act by assessing income at ₹ 57,20,460. 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 ₹ 13,47,110 being late r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order dated 21.10.2021). 7. The learned Departmental Representative supported the orders of the Income Tax Authorities. 8. We have heard the 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, 202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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 submiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 amendment to section 36[1][va] and 43B of the Act by Finance Act, 2021 is only prospective in nature and not retrospective. (i) Dhabriya Polywood Limite ..... X X X X Extracts X X X X X X X X Extracts X X X X
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