TMI Blog2022 (4) TMI 662X X X X Extracts X X X X X X X X Extracts X X X X ..... B of the Act is prospective in nature and would apply from AY 2021-22 onwards and, therefore, the amendment is not applicable to this assessment years (Assessment Year 2019-20) under consideration. - Appeal of assessee allowed. - I.T.A. Nos. 386 & 428/Kol/2021 - - - Dated:- 3-3-2022 - Sri Aby T. Varkey, Judicial Member And Sri Manish Borad, Accountant Member Sh. K.K. Khemka, Adv., appeared on behalf of the Assessee Sh. Biswanath Das, Addl. CIT, appeared on behalf of the Revenue ORDER Per Manish Borad , Accountant Member : These appeals filed by the assessee pertaining to the Assessment Years (in short AY ) 2017-18 2018-19 are directed against the order of ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC) [in short ld. CIT(A) ] dated 27.09.2021 11.10.2021 vide Appeal No. CIT(A), Kolkata-5/10080/2019-20 Appeal No. CIT(A), Kolkata- 5/10053/2019-20 which are arising out of the assessment order framed u/s 143(1) of the Income Tax Act, 1961 (in short the Act ) dated 11.12.2019 16.10.2019 by AO, CPC, Bangalore. 2. The assessee is in appeal before the Tribunal raising the following grounds: Assessment Year 2017-18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed before the ld. CIT(A). He also confirmed the view and further held that the amendment brought in by the Finance Act, 2021 inserting Explanation to Section 36(1)(va) of the Act stated is retrospective in nature and therefore provision of Section 43B of the Act will not apply on the employees contribution towards PF ESI and the same deserves to be disallowed. 4. Now, the assessee is in appeal before the Tribunal. At the outset, ld. Counsel for the assessee stated that the common issue raised for AY 2017- 18 2018-19 relating to disallowance of employees contribution towards PF ESI is squarely covered in favour of the assessee by the decision of the co-ordinate Bench in the case of Lumino Industries Ltd. vs. ACIT, Circle-5(1), Kolkata in ITA No. 365/Kol/2021 order dated 17.11.2021. 5. Per contra, ld. D/R vehemently argued in support of both the orders of the lower authorities. 6. Before us, the ld. Counsel for the assessee stated that this issue deserves to be allowed in favour of the assessee in view of the decision of this Tribunal in the case of Lumino Industries Ltd. (supra). We find that this Tribunal has adjudicated the very same issue observing as follows: 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt took note of the law laid down on this issue by the Constitution Bench in M/s Vatika Township Ltd. and held that the intent of the Parliament/legislature need to be looked into for ascertaining whether the amendment should be retrospective or not. In Vatika Township Ltd. (supra) the Hon ble Supreme Court held that the notes on clauses appended to the Finance Bill will throw light as to the legislative intent; because it has to be borne in mind that Parliament/legislature is aware of three concepts before an amendment is brought in, which can be discerned from reading of the Notes on Clauses to the Bill which are (i) prospective amendment with effect from a fixed date; (ii) retrospective amendment with effect from a fixed anterior date; and (iii) clarificatory amendments which are retrospective in nature. So when we adjudicate whether the view of Ld CIT(A) that the explanation 2 brought in by Finance Act, 2021 is retrospective, let us look at the Notes on Clauses and the relevant clauses 8 9 of the Finance Bill, 2021 (supra) pertaining to the issue in hand which in clear and unambiguous terms spells out the intention of Parliament that the amendment shall take effect from 1s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 018-19 in the case of the assessee for alleged delay in depositing the Employee s contribution towards PF ESI are deleted. Accordingly ground no. 1 raised for AY 2017-18 and ground no. 3 raised for AY 2018-19 are allowed. 9. Ground nos. 2 3 for AY 2017-18 are either general or consequential in nature and need no adjudication. 10. Now, we take the remaining grounds for AY 2018-19. 11. At the outset, the ld. Counsel for the assessee requested for not pressing ground no. 2 raised for not allowing deduction u/s 43B of the Act at ₹ 8,43,343/-. Since the ld. counsel for the assessee has not pressed this ground, the same is dismissed as not pressed. 12. Now, we take ground no. 1 for AY 2018-19, through which the assessee has challenged the order of the ld. CIT(A) in not allowing the expenditure in the nature of fee u/s 234E of the Act for late deposit of quarterly returns. At the outset, the ld. Counsel for the assessee submitted that the decision of the Tribunal in the case of DCIT, Circle-3(1), Kolkata vs. M/s. Narayani Ispat Pvt. Ltd. in ITA No. 2127/Kol/2014 order dated 30.08.2017 is squarely applicable in favour of the assessee. 13. Per contra, ld. D/R veheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e s income after the income is determined. This cannot, therefore, be considered as an expenditure for the purpose of earning any income or profits. Interest which is paid for delayed payment of advance tax on such income cannot be considered as expenditure wholly and exclusively for the purpose of business. Under the Act, the payment of such interest is inextricably connected with the assessee s tax liability. If income-tax itself is not permissible deduction under section 37, any interest payable for default committed by the assessee in discharging his statutory objection under the Act, which is calculated with reference to the tax on income, cannot be allowed as a deduction. Therefore, it was to be held that deduction of interest levied under sections 139 and 215 would not be allowable under section 37. In the above judgment, the claim of the assessee for interest expenses was denied as it defaulted to make the payment of advance tax as per the provisions of the Act. The advance tax is nothing but income tax only which the assessee has to pay on his income. In the instant case the default relates to the delay in the payment of advance tax and consequently interest wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge as specified under the Act as TDS and pays to the Government Exchequer. The amount of TDS represents the amount of income tax of the party on whose behalf the payment was deducted paid to the Government Exchequer. Thus the TDS amount does not represent the tax of the assessee but it is the tax of the party which has been paid by the assessee. Thus any delay in the payment of TDS by the assessee cannot be linked to the income tax of the assessee and consequently the principles laid down by the Hon ble Apex Court in the case of Bharat Commerce Industries Ltd. Vs. CIT (1998) reported in 230 ITR 733 cannot be applied to the case on hand. Thus, in our considered view, the principle laid down by the Hon'ble Supreme Court in the case of Bharat Commerce Industries Ltd. (supra) is not applicable in the instant facts of the case. Thus, we hold that the Assessing Officer in the instant case has wrongly applied the principle laid down by the Hon'ble Supreme Court in the case of Bharat Commerce Industries Ltd. (supra). We also find that the Hon'ble Supreme Court in the case of Lachmandas Mathura (Supra) has allowed the deduction on account of interest on late deposit of sales t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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