TMI Blog2022 (6) TMI 1412X X X X Extracts X X X X X X X X Extracts X X X X ..... ade to Section 36 and Section 43B by insertion of Explanations 2 and 5 respectively. In these Sections it is clarified that for the removal of doubts the provisions of these Sections were amended. Tribunals in the cases of Raj Kumar [ 2022 (2) TMI 1224 - ITAT DELHI] held that the amendment brought in by Finance Act, 20 2021 is effective from 1.04.2021 and no disallowance is called for, on belated payment of employees contribution to ESI and PF in case the assessee deposited the said contribution before due date for filing of return of income under Income Tax Act Thus we direct the Assessing Officer / CPC to delete the disallowance of employees contribution to EPF and ESI in all these cases as the contributions were remitted before the due date for filing of return of income. Grounds raised by the assessee are allowed. - I.T.A No. 1051/Del/2022, 1069/Del/2022, 1182/Del/2022, 1181/Del/2022, 1180/Del/2022, 1173/Del/2022, 1157/Del/2022, 1155 & 1156/Del/2022, 1153 & 1154/Del/2022, 1142/Del/2022, 1131/Del/2022, 1112/Del/2022, 1111/Del/2022, And Ors. - - - Dated:- 15-6-2022 - I.T.A No. 1033/Del/2022, 1083/Del/2022, 1123/Del/2022, 1177 1178/Del/2022, 1004/Del/2022, 1133/Del/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mar Versus Income Tax Officer Ward : 5 (3)(1), Noida,Uttar Pradesh, Shri Lakhan Singh Versus Income Tax Officer,Ward : 2 (1)Gurgaon, Mangla Apparels India Pvt. Ltd. Versus ACIT,Circle : 16 (1), New Delhi, ORM Engineering Pvt. Ltd. Versus Assessing Officer,Circle : 2 (1) Faridabad, Creative Arts Education Society Versus JCIT,Special Range : 17,New Delhi, Saroj Gautam Versus Income Tax Officer,Ward : 4 (1) Gurgaon, Garg Heart Centre Nursing Home Pvt. Ltd Versus ACIT, Circle : 10 (1), New Delhi, DDF Consultants P. Ltd Versus ADIT,Circle : 7 (1), New Delhi, M/s. Fashion Makers Group Versus DCIT,Circle : 59 (1), New Delhi, Tej Singh Ghangas Versus Income Tax Officer,Ward : 3, Panipat, Shri Karan Luthra Versus Income Tax Officer, Circle : 62 (1) New Delhi, First Plumbing P. Ltd Versus Income Tax Officer,Ward : 9 (2) New Delhi, Shri Kamal Luthra Versus Income Tax Officer, Circle : 30 (1) New Delhi, Dewan Fourwheels Pvt. Ltd. Versus DCIT, Circle Rewari, Sai Creation Versus Income Tax Officer, Ward : 60 (6) New Delhi, Shamsons Polymers P. Ltd Versus DCIT, Circle : 22 (2) New Delhi, Yogesh Bansal Versus ADIT/Income Tax Officer,CPC/Ward : 34 (1) Bengaluru/New Delhi, Bharat Bhushan Versus D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d PF and the ld. CIT (Appeals) also sustaining the disallowance relying on various case laws referred to in the order of the ld. CIT (Appeals). The ld. DR submits that the amendment brought in by the Finance Act, 2021 in Sections 36(1)(va) and 43B of the Act by way of inserting Explanation 2 and Explanation 5 respectively are clarificatory in nature and, therefore, have retrospective applicability. The ld. DR strongly supported the orders of the ld. CIT (Appeals) in sustaining the disallowance made under Section 36(1)(va) of the Act in respect of employees contribution made to ESI and PF. The ld. Counsels appearing for the assesses submitted that the amendments are prospective and are applicable for Assessment Years 2021-22. The ld. Counsels for the assessees submitted that the contributions to PF and ESI were remitted to Govt. account before due dates for filing returns of income by the assessees and, therefore, the issue is squarely covered by the decision of the jurisdictional High Court in the case of CIT Vs. AIMIL Ltd. 321 ITR 508. Reliance was also placed on the decision of the Hon ble Supreme Court in the case of M.M. Aqua Technologies Ltd. Vs. CIT (Civil Appeal Nos. 4742 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt reads as under: (order dated 06.09. 2018) 2. Whether the payment of provident fund and employees state insurance dues deposited by the assessee within the grace period would qualify for deduction under Section 43B of the Income Tax Act, 1961? 23. The said question was dealt at para 7 8 of the order, it has been held that the assessee undoubtedly was entitled to claim the benefit and properly treat such amounts as having been duly deposited, which were infact deposited within the period pr escribed (i.e.15+5 days in the case of EPF and 21 days + any other grace period in terms of extent notification). 24. Thus, the Hon ble Court has held that the employers contribution is an allowable deduction, if paid before the due date answering the question of law framed. The Hon ble Court went further and held that as far as the amounts constituting deductions from employee s salaries towards their contributions, which were made beyond such stipulated period, obviously the assessee was not entitled to claim the deduction from its returns. 25. We have perused the order of the Hon ble Jurisdictional High Court in the case of CIT Vs. AIMIL Ltd. 321 ITR 508 v ide or der dated 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s L td. 213 CTR 268 to support its decision to the effect that if the employers' as well as employees' contribution towards provident fund and ESI is paid before the due date of filing of return, no disallowance can be made by the Assessing Officer. 28. The relevant part of the order of the ITAT relying on the CIT Vs. Vinay Cements Ltd. (supra) is as under: 11. We have carefully considered the rival submissions in the light of material placed before us. In the assessment order l d. Assessing Officer has categorically stated that what the amount due was for which month in respect of EPF, Family Pension, PF inspection charges and ES I deposits and what were the due dates for these deposits and on which date these deposits were made. The dates of deposits are mentioned between 23rd May, 2001 to 23rd April, 2002. The latest payment is made on 23rd April, 2002 and assessee being limited company had filed its return on 20th October, 2002 which is a date not beyond the due date of filing of the return. Thus, it is clear beyond doubt that all the payments which have been disallowed were made much earlier to the due date of filing of the return. The disallowance is not made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from his employees as contributions to any provident fund or superannuation fund or any fund set up under the provisions of the Employees' State Insurance Act, 1948 (34 of 1948), or any other fund for the welfare of such employees. FINANCE ACT, 2021 [13 OF 2021] An Act to give effect to the financial proposals of the Central Government for the financial year 2021-2022.BE it enacted by Parliament in the Seventy-second Year of the Republic of India as follows: - CHAPTER I PRELIMINARY Short title and commencement. 1. (1) This Act may be called the Finance Act, 2021. (2) Save as otherwise provided in this Act, (a) sections 2 to 88 shall come into force on the 1st day of April, 2021; (b) sections 108 to 123 shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. Amendment of section 36. 9. In section 36 of the Income-tax Act, in sub-section (1), in clause (va), the Explanation shall be numbered as Explanation 1 thereof and after Explanation 1 as so numbered, the following Explanation shall be inserted, namely: 'Explanation 2. For the removal of doubts, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued there-under or under any standing order, award, contract of service or otherwise. Section 43B specifies the list of deductions that are admissible under the Act only upon their actual payment. Employer's contribution is covered i n clause (b) of section 43B. According to it, i f any sum towards employer's contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of the employees is actually paid by the assessee on or before the due date for furnishing the return of the income under sub-section (1) of section 139, assessee would be entitled to deduction under section 43B and such deduction would be admissible for the accounting year. This provision does not cover employee contribution referred to in clause (va) of subsection (1) of section 36 of the Act. Though section 43B of the Act covers only employer s contribution 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 employ er contribution and employee s contribution towards welfare fund. It may be noted that employee s contribution towards welfare funds ..... X X X X Extracts X X X X X X X X Extracts X X X X
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