TMI Blog2022 (4) TMI 1504X X X X Extracts X X X X X X X X Extracts X X X X ..... ason Parliament specifically chose to make the proviso affective from a particular date. In the present case also, the amendment brought out by Finance Act, 2021 by way of Explanation-2 to s. 36(1)(va) of the Act along with Explanation-5 to s. 43B of the Act w.e.f. 01.04.2021 i.e. for and from assessment year 2021-22, cannot be applied retrospectively. Thus, from the above, it is clear that the amendment brought in the statute i.e., by Finance Act, 2021, the provisions of Section 36(1)(va) r.w.s. 43B of the Act amended by inserting Explanation 2 is prospective and not retrospective. Hence, the amended provisions of Section 43B r.w.s. 36(1)(va) of the Act are not applicable for the assessment year 2018-19 but will apply from assessment year 2021-22 and subsequent assessment years. Hence, this issue of assessee s appeal is allowed. - I.T.A.No.140/Viz/2021 - - - Dated:- 7-4-2022 - SHRI DUVVURU RL REDDY, HON BLE JUDICIAL MEMBER SHRI S BALAKRISHNAN, HON BLE ACCOUNTANT MEMBER For the Appellant by : Shri C.Subrahmanyam, AR For the Respondent by : Shri SPG Mudaliar, DR ORDER Per Shri Balakrishnan S, Accountant Member This appeal is filed by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd circumstances of the case, the order passed u/s 143(1) of the I.T.Act is contrary to the provisions of the Act and facts of the case. 2. The Ld.Commissioner of Income Tax (Appeals), National Faceless Appeals Centre (in short CIT(A), NFAC ) erred in confirming the addition of Rs.2,38,809/-, the payment of Employee s share of ESI PF, on the ground that the belated payment of employee s contribution is not allowable u/s 36(1)(va) of the I.T.Act. 3. The Ld.CIT(A), NFAC ought to have held that PF contribution of Employees if paid within the due date of filing of return of income is allowable for deduction in view of the provisions of Sec. 36(1) (Va) and sec. 438 of the I.T. Act. 4. The Ld. CIT(A), NFAC before giving the verdict on the disputed issue failed to discuss/consider the various submissions made by the assessee vide submissions made on dt.06.01.2021. This way the order passed by Ld. CIT(A), NFAC is one sided and against all judicial norms. 5. The Ld. CIT(A), NFAC failed to appreciate that in view of the Memorandum of Explanation issued by CBUT, the Amendment made by Finance Act 2021 to section 36(1)(va) and 438 of the Act is only applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial 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 is clarified that the provisions of Section 43B of the Act shall not apply and shall be deemed or ought to have been applied for the purpose of determining the due date under this clause. This amendment has brought in the statute book to provide certainty about the applicability of provisions of Section 43B of the Act in spite of belated payment of employees contribution. We also noted from the memorandum explaining the provisions to Finance Act, 2021, wherein relevant Clauses to said memorandum clearly intended that the amendment shall take effect from 01.04.2021 and will accordingly apply to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontribution and does not cover employee contribution, some courts have applied the provision of section 43B on employee contribution as well. There is a distinction between employer 40 contribution and employee s contribution towards welfare fund. It may be noted that employee s contribution towards welfare funds is a mechanism to ensure the compliance by the employers of the labour welfare laws. Hence, it needs to be stressed that the employer s contribution towards welfare funds such as ESI and PF needs to be clearly distinguished from the employee s contribution towards welfare funds. Employee s contribution is employee own money and the employer deposits this contribution on behalf of the employee in fiduciary capacity. By late 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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