TMI Blog2022 (3) TMI 1030X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 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 - 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. Accordingly, we decide this issue in favour of the assessee. - ITA No.637/Bang/2021, ITA No.638/Bang/2021, ITA No.639/Bang/2021 - - - Dated:- 22-3-2022 - Shri George George K, JM And Ms.Padmavathy S, AM For the Appellant : Sri.V.Sridhar, CA For the Respondent : Sri.Sankar Ganesh D, JCIT-DR OR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment thereof apply to both employer and employee's contributions to PF / ESI. Hence, belated payment of PF / ESI paid before filing return of income U/s 139(1) are allowable deduction. 5. The Appellant objects the interpretation given CIT(A)- NFAC, Delhi, in respect of amendment made to section 36(~)(va) and 43B is Finance Act 2021 that the amendment was made to remove doubt as to the meaning of existing law as any amendment made by the Finance Act are prospective in nature as it has specifically held as applicable from 1st April 2020. 6. The CIT(A)-NFAC, Delhi, erred in not following the Jurisdictional High Court order which amounts to contempt of Court and for which the CIT(A)-NFAC, Delhi are liable to pay suitable damages. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e preferred appeals 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) held that the issue involved in the appeals is debatable and hence appeal cannot be entertained from an order u/s 154 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SI 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 aff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctober, 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. 8.1 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 Essa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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