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2021 (11) TMI 1020 - AT - Income TaxAddition u/s 36(l)(va) - Delay deposits of ESI and PF from salary of the employees - as submitted whole of the amount had been deposited well before the due date of filing of Income Tax Return - whether the Amendments carried out by the Finance Act 2021 in Section 36(l)(va) and u/s 43B of the Act were prospective in nature or retrospective? - HELD THAT - Tribunal has consistently allowed similar claims of the assessee holding that the Amendments effected by the Finance Act 2021 to section 36(l)(va) and u/s 43B of the income Tax Act are not clarificatory in nature and they do not have retrospective effect and are applicable prospectively. Reading from the Notes on Clauses at the time of introduction of the Finance Act 2021 it has been held that the amendment being applicable in relation to assessment year 2021-22 and subsequent years. Accordingly considering the factual backdrop of the present case and considering the amendments in Section 36(1 )(va) as well as Section 43B carried out by Finance Act 2021 and Memorandum explaining the provisions in Finance Bill 2021 we hold that the impugned disallowance is not sustainable. Hence the addition is directed to be deleted as the amount stood deposited by the due date as held in Section 139(1) - Decided in favour of assessee.
Issues:
1. Correctness of order dated 30.07.2021 of ld. CIT(A) (NFAC) Delhi for the 2017-18 assessment year u/s 250(6) of the Income Tax Act,1961. 2. Addition of ?8,68,410/- u/s 36(1)(va) of the Act regarding ESI and PF collection from employees. Issue 1: Correctness of CIT(A) Order The assessee contested the order dated 30.07.2021 of ld. CIT(A) (NFAC) Delhi for the 2017-18 assessment year u/s 250(6) of the Income Tax Act,1961. The appeal primarily focused on the correctness of the said order. Issue 2: Addition u/s 36(1)(va) of the Act The main issue revolved around the addition of ?8,68,410/- u/s 36(1)(va) of the Act concerning the collection of ESI and PF from employees by the assessee. The contention was that the entire amount had been deposited well before the due date of filing the Income Tax Return. Detailed Analysis: The ld. AR argued that the issue falls under ground No. 2, challenging the addition made by the AO u/s 36(1)(va) of the Act. The AR cited consistent orders of the ITAT, Chandigarh Benches, and referred to the decision of the jurisdictional High Court to support the assessee's case. The ld. Sr.DR, on the other hand, relied on the order without presenting any contrary decision to oppose the appeal. The Tribunal, after hearing the submissions and examining the material on record, noted that the controversy regarding the prospective or retrospective nature of the Amendments in Section 36(1)(va) and u/s 43B of the Act had been settled by various ITAT Benches. The Tribunal referred to specific orders of different Benches, including those of Delhi, Hyderabad, and Chandigarh, to establish that the Amendments by the Finance Act, 2021, were not clarificatory or retrospective in nature. The Tribunal also highlighted that the amendments were applicable from the assessment year 2021-22 onwards. Considering the factual background and the amendments introduced by the Finance Act, 2021, the Tribunal concluded that the impugned disallowance was not sustainable. The Tribunal held that the addition should be deleted as the amount had been deposited by the due date as required by Section 139(1) of the Act. Consequently, the appeal of the assessee was allowed, and the addition was directed to be deleted. The order was pronounced in the presence of the parties via Webex on 16th November 2021.
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