TMI Blog2022 (4) TMI 1264X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of determining the due date under this clause? - HELD THAT:- In the present case before insertion of Explanation 2 to Section 36(1)(va) of the Act, there is ambiguity regarding due date of payment of employees' contribution on account of provident fund and ESI, whether the due date is as per the respective Acts or up to the due date of filing of return of income of the assessee. As noted by Hon'ble Supreme Court in the case of CIT vs. Vatika Township Pvt. Ltd [ 2014 (9) TMI 576 - SUPREME COURT] an amendment made to a taxing statute can be said to be intended to remove hardship only of the assessee and not of the Department. Imposing of a retrospective levy on the assessee would cause undue hardship and for that reason Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 on 21.09.2018, declaring total income of ₹ 28,71,314/-. However, the Centralized Processing Centre (CPC) has served an order dated 16.10.2019, assessing the total income at ₹ 29,53,626/-. The CPC has disallowed a sum of ₹ 82,312/-, being late payment of Employee contribution of PF of ₹ 72,038/- and ESI of ₹ 10,274/-. 3. Aggrieved by the order of the CPC, the assessee filed appeal before the CIT(A) which was migrated to the NFAC in terms of notification No. 76/2020 in S.O. No. 3296(E), dated 25/09/2020 from CBDT. The CIT(A) held that the payment of employees contribution made after the due date, by which the assessee is required as an employer to credit an employee's contribution to the employee's a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... faceless assessment centre, towards disallowance of employee's contribution to PF ESI. The appellant submits that though the amount could not be paid within the due dates under the PF Act and ESI Act, the same were paid before the due date of filing the return u/s. 139(1) of the Act. Thus, the appellant submits that the amount is allowable u/s. 43B of the Act The above contention of the appellant is duly supported by the jurisdictional ITAT Order dt. 20.09.2017 of the Hon'ble ITAT, Visakhapatnam in the case of Eastern Power Distribution Company of AP Ltd. in ITA No. 374/Viz/2017. The appellant submits that the disallowance is not warranted as the issue is squarely covered by the aforesaid decision of the Hon'ble ITAT, V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the CIT(A) has passed exhaustive order explaining all provisions of the Act. 7. We have heard rival contentions and perused the relevant material on record. Admitted facts are that the payment of PF contribution regarding employees' contribution is made within the due date of filing of return of income. The Revenue has disputed that the employees' contribution received by the assessee would be treated as income of the assessee because the same has not been deposited in the Government account within the due date as prescribed under the respective Acts. Now, the question arises, whether by the Finance Act, 2021, the provisions of Section 36(1)(va) by inserting the Explanation 2 r.w.s. 43B of the Act have been amended, whereby it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id sub-section provides for deduction of any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the due date. Explanation to the said clause provides that, for the purposes of this clause, due date to mean the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued thereunder or under any standing order, award, contract of service or otherwise. Section 43B specifies the list of deductions that are admissib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te deposit of employee contribution, the employers get unjustly enriched by keeping the money belonging to the employees. Clause (va) of sub-section (1) of Section 36 of the Act was inserted to the Act vide Finance Act 1987 as a measures of penalizing employers who mis-utilize employee's contributions. Accordingly, in order to provide certainty, it is proposed to- (i) amend clause (va) of sub-section (1) of section 36 of the Act by inserting another explanation to the said clause to clarify that the provision of section 43B does not apply and deemed to never have been applied for the purposes of determining the due date under this clause; and (ii) amend section 43B of the Act by inserting Explanation 5 to the said section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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