TMI Blog2022 (3) TMI 609X X X X Extracts X X X X X X X X Extracts X X X X ..... ration. 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.749/Bang/2021 ITA No.750/Bang/2021 - - - Dated:- 22-2-2022 - Shri George George K, JM And Ms.Padmavathy S, AM For the Appellant : Sachin Metha, AR For the Respondents : D. Kiran, Addl. CIT-DR ORDER Per Padmavathy S., AM These appeals are against two orders of the CIT(A), National Faceless Appeal Centre (NFAC), both dated 06.11.2021. The relevant assessment years are 2018-2019 and 2019-2020. 2. Identical grounds are raised in both the appeals, except variance in figures, hence, the grounds raised for assessment year 2018-2019 is reproduced below:- 1.1 On the facts and circumstances of the case, the learned Commissioner of Income Tax (Appeals) erred in disallowing the claim in respect of belated remittance of employee's provident fund and ESI contribution of ₹ 24,53,002/-. After the omission of the second proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue date referred to in Section 36(1)(va) of the Act must be read in conjunction with Section 43B(b) of the Act and a reading of the same would make it amply clear that the due date as mentioned in Section 36(1)(va) is the due date as mentioned in section 43B(b) i.e. payment/contribution made to the Provident Fund Authority any time before filing the return for the year in which the liability to pay accrued and hence, the aforementioned amount is eligible for deduction as the same was remitted before the due date applicable - to the Assessee for furnishing the return of income. In this regard, the assessee placed reliance on the decision of the Hon'ble Karnataka High Court in the case of CIT vs. Sabari Enterprises (298 ITR 141), wherein it was held that provisions of section 43B of the Act is applicable even to employees' contribution paid belatedly and if such belated payment is made on or before the due date of filing of the return of income u/s. 139(1) of the Act, the same should be allowed as deduction. The Hon'ble ITAT of Bangalore has allowed deduction in this regard in the case of DCIT vs. Adecco India Pvt. Ltd. (ITA 964/Bang/2013) by relying on the above mentione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the prescribed due date under the respective PF Act or Scheme will result in negating employer's claim for deduction permanently forever u/s. 36(1)(va). On the other hand, delay in payment of employer's contribution is visited with deferment of deduction on payment basis u/s. 43B and is therefore not lost totally. (iv) That the legal distinction between employees' contribution and employer's contribution under the Act was duly recognised by the Courts in below listed decisions, wherein the courts have clearly distinguished the facts from the decision of the Hon'ble Supreme Court in the case of Alom Extrusions Ltd (supra) (a) CIT v. Gujarat State Road Transport Corporation (2014) 41 taxamnn.com 100/66 ITR 170/223 Taxman 398 (Guj.), (b) CIT v. Merchem Ltd (2015) 61 taxmann.com 119/235 Taxman 291/ 378 ITR 443 (Ker) (b) Popular Vehicles Services Pvt. Ltd. v. CIT (2018) 96 taxmann.com 13/257 Taxman 120/406 ITR (Ker) 8. The CIT(A) thereafter held that there were contradicting decisions by the various High Courts on considering section 36(1)(va) and 43B and in the back drop of that Finance Bill 2021 brought in explanations to section 36(1)(va) a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... va) and 43B are not clarificatory in nature. The relevant finding of the ITAT in the case of M/s. Shakuntala Agarbathi Company (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 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 reported in 366 ITR 170 (Guj.). The Hon'ble High Court was considering following substantial question of law:- Whether in law, the Tribunal was justified in affirming the finding of Assessing Officer in denying the appellant's claim of deductions of the employees contribution to PF/ESI alleging th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal 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 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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