TMI Blog2022 (5) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 days in filling this appeal. The assessee has moved an application for seeking the condonation of delay vide their application dated 08.04.2022. The contentions raised in the petition are that the order was passed by NFAC, Delhi on 17.05.2021. Due to pandemic Covid-19, offices of the counsels remained closed from mid-March till 31.05.2021. That on 27.04.2021, owing to the new surge of cases, the Supreme Court vide miscellaneouos Application no. 665/2021 in SMW ( c ) No. 03/2020, restored its order dated 23.03.2020 and 08.03.2021 (whereby limitations were extended originally ) and further suspended limitation under general or special laws in respect of all judicial or quasi-judicial proceedings till further orders under article 142 read with article 141 and listed the matter for 19.07.2021. Thereby, effectively, limitation stands suspended from 15.03.2020. That, again Hon ble Supreme Court, vide order dated 10.01.2022 in MA no. 21 of 2022 restored its original order whereby limitation period was extended and further extended period upto 28.02.2022. Thus, it is submitted that the delay in filling the appeal is absolutely inadvertent and has occurred due to circumstances beyond the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore consequent disallowance deserves to be deleted. 2. That the appellant craves the right to added, delete, amend or abandon any of the grounds of appeal either before or at the time of hearing of appeal. 7. The main issue arises in this appeal of the assessee is regarding disallowance of employee s contribution of PF and ESI deposited after the due date under the specified act but before due date of filing of return of income U/s 139(1) of the Income Tax Act, 1961 (in short, the Act). 8. The assessee filed its return of income on 17.10.2019 which was processed u/s 143(1) of the Act whereby an adjustment was made on account of disallowance of claim of deduction with respect to employees contribution towards PF and ESIC deposited after the due date specified under the respective Act. During the course of assessment proceedings, the CPC, Bangalore made disallowance of Rs.1,25,496/- on account of late deposit of employees contribution towards PF/ESI as prescribed under the respective act but before due date of filling return of income. The assessee challenged the said adjustment before the ld. CIT(A)/NFAC and contended that as per the binding precedents if the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B of the Income-tax Act, after Explanation 4, the following Explanation shall be inserted, namely: Explanation 5.-For the removal of doubts, it is hereby clarified that the provisions of this section shall not apply and shall be deemed never to have been applied to a sum received by the assessee from any of his employees to which the provisions of sub clause (x) of clause (24) of section 2 applies. 4.2 Thus, the Finance Act, 2021, has amended section 36 of the Income-tax Act, relating to other deductions. Sub-section (1) of the said section provides for allowing of deductions provided for in the clauses thereof for computing the income referred to in section 28 of the said Act. Clause (va) of the said sub-section provides for allowance of deduction for 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 means the date by which the assessee is required as an employer to credit an e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition of Rs.1,25,496/- on account of late payment of employees PF and ESI Contribution under the prescribed act but before the due date of filling the ITR the same has been paid. To this effect, the ld. AR of the assessee also relied upon the recent decision dated 11-03-2022 of this Bench in the case of Vinod Kumar Sharma vs The CPC, Bengaluru/ ACIT, Circle- 1, Kota (ITA No.46/JP/2022) praying that the addition so sustained by the ld. CIT(A)/NFAC amounting to Rs.1,25,496/- may kindly be deleted. 12. On the other hand, the ld. DR supported the orders of the lower authorities and submitted that the since the law is changed the amount is not allowable. 13. We have heard both the parties and perused the materials available on record. The Bench noted during the course of hearing that the AO made an addition of Rs.1,25,496/-on account of late deposit of employees PF ESI by the assessee under the prescribed act but before the due date of filling the return of income u/s 139 of the Act. It is further observed that the ld. CIT(A)/NFAC has confirmed the action of the AO holding that the sum of Rs.1,25,496/- being employees contribution to PF/ESI has been paid late under that A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the return of income was also filed on the said date. Admittedly and undisputedly, the employees s contribution to ESI and PF which have been collected by the assessee from its employees have thus been deposited well before the due date of filing of return of income u/s 139(1) of the Act. 14. The issue is no more res integra in light of series of decisions rendered by the Hon ble Rajasthan High Court starting from CIT vs. State Bank of Bikaner Jaipur (supra) and subsequent decisions. 15. In this regard, we may refer to the initial decision of Hon ble Rajasthan High Court in case of CIT vs. State Bank of Bikaner Jaipur wherein the Hon ble High Court after extensively examining the matter and considering the various decisions of the Hon ble Supreme Court and various other High Courts has decided the matter in favour of the assessee. In the said decision, the Hon ble High Court was pleased to held as under: 20. On perusal of Sec.36(1)(va) and Sec.43(B)(b) and analyzing the judgments rendered, in our view as well, it is clear that the legislature brought in the statute Section 43(B)(b) to curb the activities of such tax payers who did not discharge their statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the respective Act such as PF etc. also provides that the amounts can be paid later on subject to payment of interest and other consequences and to get benefit under the Income Tax Act, an assessee ought to have actually deposited the entire amount as also to adduce evidence regarding such deposit on or before the return of income under sub-section (1) of Section 139 of the IT Act. 23. Thus, we are of the view that where the PF and/or EPF, CPF, GPF etc., if paid after the due date under respective Act but before filing of the return of income under Section 139(1), cannot be disallowed under Section 43B or under Section 36(1)(va) of the IT Act. 16. The said decision has subsequently been followed in CIT vs. Jaipur Vidyut Vitran Nigam Ltd. (supra), CIT vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. (supra), and CIT vs Rajasthan State Beverages Corporation Limited (supra). In all these decisions, it has been consistently held that where the PF and ESI dues are paid after the due date under the respective statues but before filing of the return of income under section 139(1), the same cannot be disallowed under section 43B read with section 36(1)(va) of the Act. 17. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Essae Teraoka Pvt. Ltd., (supra) has taken the view that employee's contribution under section 36(1)(va) of the Act would also be covered under section 43B of the Act and therefore if the share of the employee's share of contribution is made on or before due date for furnishing the return of income under section 139(1) of the Act, then the assessee would be entitled to claim deduction. Therefore, the issue is covered by the decision of the Hon'ble Karnataka High Court. The next aspect to be considered is whether the amendment to the provisions to section 43B and 36(1)(va) of the Act by the Finance Act, 2021, has to be construed as retrospective and applicable for the period prior to 01.04.2021 also. On this aspect, we find that the explanatory memorandum to the Finance Act, 2021 proposing amendment in section 36(1)(va) as well as section 43B is applicable only from 01.04.2021. These provisions impose a liability on an assessee and therefore cannot be construed as applicable with retrospective effect unless the legislature specifically says so. In the decisions referred to by us in the earlier paragraph of this order on identical issue the tribunal has taken a view that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Geotechnical Services (supra). As far as the applicability of amendment made by Finance Act 2021 is concerned, I find that the Co-ordinate Bench of Tribunal in the case of Indian Geotechnical Services (supra) has held that amendment made by Finance Bill 2021 shall take effect from 1st April 2021 and will accordingly apply to A.Y. 2021-11 and subsequent years. In the present case assessment year involved is 2018-19 and therefore following the aforesaid decision in thecase of Indian Geotechnical Services (supra), I am of the view that the amended provisions would have no application to the case under consideration. Before me, Learned DR has relied on the decision of Co-ordinate Bench of Tribunal in the case of Vedvan Consultants Pvt. Ltd. (supra). It is settled law that when two judgments are available giving different views then the judgment which is in favour of the assessee shall apply as held in case of Vegetable Products Ltd. 82 ITR 192 by the Hon ble Supreme Court. I therefore following the decision of High Courts cited hereinabove and the decision of the Co-ordinate Bench of Tribunal, I am of the view that no addition u/s 36(1)(va) of the Act is called for in the present case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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