9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (12) TMI 1332 - AT - Income TaxEmployees share of contribution to ESI to the extent not paid on or before the due date as mentioned in Sec 36(1)(va) - HELD THAT - Hon ble Karnataka High Court in the case of Essae Teraoka Pvt. Ltd., (supra) 2014 (3) TMI 386 - KARNATAKA HIGH COURT 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. In this case there is no dispute that the assessee made payment of the Employees share of PF/ESI on or before the due date for filing return of income for AY 2017-18 u/s.139(1) of the Act. 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. 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 the aforesaid amendment is applicable only prospectively i.e., from 1.4.2021. We are therefore of the view that the impugned additions made under section 36(1)(va) of the Act, deserves to be deleted. Appeal of assessee allowed.
Issues:
1. Interpretation of section 36(1)(va) and 43B of the Income Tax Act regarding the deduction of employees' share of contribution to ESI. 2. Applicability of the amendments made by the Finance Act, 2021 to section 36(1)(va) and 43B of the Act. 3. Legal distinction between employees' and employer's contribution under the Act. 4. Retrospective application of the amendments to section 36(1)(va) and 43B by the Finance Act, 2021. 5. Consistency of decisions on the issue across various tribunals and High Courts. Analysis: 1. The case involved an appeal by a Private Limited Company against the order of CIT(A) regarding the addition of employees' share of contribution to ESI. The company contended that the contribution had been paid before the due date for filing the return, relying on relevant judicial decisions. 2. The CIT(A) referred to the amendments made by the Finance Act, 2021 to section 36(1)(va) and 43B of the Act. The amendments clarified that the provisions of section 43B shall not apply for determining the due date under section 36(1)(va). The CIT(A) held that the amendments were declaratory in nature and applicable with retrospective effect. 3. The CIT(A) distinguished between employees' and employer's contributions under the Act, emphasizing that they operate on different parameters and have different consequences for non-payment within specified dates. Various judicial pronouncements recognized this legal distinction, supporting the CIT(A)'s view. 4. The High Court's decision in Essae Teraoka Pvt. Ltd. held that employees' contribution under section 36(1)(va) would be covered under section 43B. However, the tribunal found that the amendments by the Finance Act, 2021 were applicable only prospectively from 01.04.2021, based on the explanatory memorandum. 5. The tribunal noted consistency in decisions on the issue across various cases and High Courts. It concluded that the impugned additions under section 36(1)(va) deserved to be deleted, allowing the appeal of the assessee. The tribunal accepted the Revenue's submission regarding rectification subject to statutory limitations. This detailed analysis of the judgment provides insights into the interpretation of relevant sections of the Income Tax Act, the impact of legislative amendments, legal distinctions between contributions, and the retrospective application of statutory changes, ensuring a comprehensive understanding of the case.
|
