TMI Blog2022 (5) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... 2022 - SHRI AMIT SHUKLA, JUDICIAL MEMBER ASSESSEE BY : Shri Pranav Yadav, Advocate REVENUE BY : Ms. Radha Katyal Narang, Senior DR ORDER The aforesaid appeals have been filed by the assessee against the separate impugned orders passed by the National Faceless Appeal Centre (NFAC), Delhi for the Assessment Years 2018-19 2019-20 vide orders dated 01.11.2021 11.10.2021 respectively. 2. In the aforesaid appeals, the assessee had challenged the disallowance of payment of employees contribution towards Provident Fund and ESI under section 36(1)(va) read with section 43B of the Income-tax Act, 1961 (for short the Act ). 3. In this case, the CPC had made a disallowance vide intimation u/s 143(1) of the Act by enhancing the total income by making addition of Rs.7,71,709/- Rs.2,31,519/- for AYs 2018-19 2019-20 respectively, on account of disallowance of PF/ESI u/s 36(1)(va). NFAC has upheld the disallowance after detailed discussion and referring to various judgments in support of the legal proposition that the amendment which has been brought into by Finance Act, 2021 w.e.f. 01.04.2021 by bringing Explanation 5 in section 43B and amending clause (va) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contention of the Revenue. 15. In CIT v. Dharmendra Sharma, 297 ITR 320, this Court specifically dealt with this issue and relying upon the aforesaid judgment of the Guwahati High Court, as affirmed by the Supreme Court in Vinay Cement (supra), the appeal of the Revenue was dismissed. More detailed discussion is contained in another judgment of this Court in CIT v. P.M. Electronics Ltd. (ITA No. 475/2007 decided on 3.11.2008). Specific questions of law which were proposed by the Revenue in that case were as under :- (a) Whether amounts paid on account of PF/ESI after due date are allowable in view of Section 43B, read with Section 36(1)(va) of the Act? (b) Whether the deletion of the 2nd proviso to Section 43B by way of amendment by the Finance Act, 2003 is retrospective in nature? 16. These questions were answered by the Division Bench in the following manner :- 7. Having heard the learned counsel for the Revenue, as well as, the assessee, we are of the view that the view taken by the Tribunal deserves to be sustained as it is no longer res integra in view of the decision of the Supreme Court in the case of CIT v Vinay Cement Ltd: 213 ITR 268 wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 7.3.2007 wherein it observed as follows:- Delay condoned. In the present case we are concerned with the law as it stood prior to the amendment of Section 43-B. In the circumstances, the assessee was entitled to claim the benefit in Section 43-B for that period particularly in view of the fact that he has contributed to provident fund before filing of the return. Special Leave Petition is dismissed. 10. In view of the above, it is quite evident that the special leave petition was dismissed by a speaking order and while doing so the Supreme Court had noticed the fact that the matter in appeal before it pertain to a period prior to the amendment brought about in Section 43B of the Act. The aforesaid position as regards the state of the law for a period prior to the amendment to Section 43B has been noticed by a Division Bench of this Court in Dharmendra Sharma (supra). Applying the ratio of the decision of the Supreme Court in Vinay Cement (supra) a Division Bench of this Court dismissed the appeals of the Revenue. In the passing we may also note that a Division Bench of the Madras High Court in the case of CIT v. Nexus Computer (P) Ltd by a judgment dated 18.8.08 passed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n these circumstances indicated above, we are of the opinion that no substantial question of law arises for our consideration in the present appeal. The appeal is, thus, dismissed. 17. It also becomes clear that deletion of the 2nd proviso is treated as retrospective in nature and would not apply at all. The case is to be governed with the application of the 1st proviso. 18. We may only add that if the employees‟ contribution is not deposited by the due date prescribed under the relevant Acts and is deposited late, the employer not only pays interest on delayed payment but can incur penalties also, for which specific provisions are made in the Provident Fund Act as well as the ESI Act. Therefore, the Act permits the employer to make the deposit with some delays, subject to the aforesaid consequences. Insofar as the Income Tax Act is concerned, the assessee can get the benefit if the actual payment is made before the return is filed, as per the principle laid down by the Supreme Court in Vinay Cement (supra). 19. We, thus, answer the question in favour of the assessee and against the Revenue. As a consequence, the appeals filed by the assessees stand allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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