9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (3) TMI 1408 - AT - Income TaxDelayed contribution to PF and ESI - addition u/s 36(1)(va) r.w.s 43B - Scope of amendment - CIT(A) has confirmed the disallowance on the ground that insertion of Explanation 2 and 5 in Section 43B 36(1)(va) by Finance Act 2021 is retrospective in nature - HELD THAT - Hon ble High Court decided the issue in favour of the assessee relying upon the judgment of AIMIL Ltd. 2009 (12) TMI 38 - DELHI HIGH COURT as held that the legislative intent is to ensure that the amount paid is allowed as expenditure only when payment is actually made. We do not think that the legislative intent and objective is to treat belated payment of Employee s Provident Fund (EPF) and Employee s State Insurance Scheme (ESI) as deemed income of the employer under Section 2(24)(x) of the Act. 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. 1973 (1) TMI 1 - SUPREME COURT by the Hon ble Supreme Court. Hence in light of the latest decision in case of Pro Interactive Service (India) Pvt. Ltd. 2018 (9) TMI 2009 - DELHI HIGH COURT the issue is covered in favour of the assessee. Therefore the CIT(A) as well as the Assessing Officer was not at all justified in disallowing this claim. Thus the order of the CIT(A) is not just and proper. The appeal of the assessee is thus allowed.
Issues:
1. Interpretation of Section 36(1)(va) and Section 43B regarding the due date for deduction of contributions to PF and ESI. 2. Disallowance of Rs. 23,03,667 under Section 36(1)(va) by the CIT(A). 3. Application of newly amended provisions by the Finance Act 2021. 4. Legal implications of delayed payment of employee contributions to Provident Fund and ESI. 5. Applicability of High Court decisions on debatable issues. 6. Retrospective nature of amendments in Section 36(1)(va) and Section 43B. Analysis: 1. The appeal raised concerns regarding the due date for deduction of contributions to PF and ESI under Section 36(1)(va) and Section 43B. The CIT(A) interpreted the provisions in light of the newly amended provisions by the Finance Act 2021, emphasizing that the due date specified in the statutes should be adhered to for claiming deductions. 2. The CIT(A) confirmed the addition of Rs. 23,03,667 under Section 36(1)(va) by the Assessing Officer. The assessee contended that the addition was made without considering their submissions and challenged the action of the CPC based on the Audit Report. The assessee relied on various High Court decisions to support their claim that the issue was debatable and should be decided in their favor. 3. The newly amended provisions by the Finance Act 2021 were crucial in this case. The insertion of Explanation 2 and 5 in Section 36(1)(va) and Section 43B clarified that the due date for contributions is as per the specific statutes. The retrospective application of these amendments was a point of contention between the parties. 4. The legal implications of delayed payment of employee contributions to Provident Fund and ESI were extensively discussed. The CIT(A) and the Assessing Officer argued that the contributions were made after the statutory due date, leading to the disallowance. However, the assessee highlighted that specific provisions in the relevant Acts allowed for some delays in depositing contributions. 5. High Court decisions on debatable issues played a significant role in the arguments presented. The assessee cited various judgments supporting their position, emphasizing that when conflicting views exist, the one favoring the assessee should apply. 6. The retrospective nature of the amendments in Section 36(1)(va) and Section 43B was a key point of contention. The Tribunal analyzed the effective date of these amendments and concluded that they were not retrospective, applying from the specified date. The decision also considered recent High Court judgments to support the assessee's claim, ultimately allowing the appeal. In conclusion, the Tribunal allowed the appeal of the assessee, emphasizing the importance of adhering to the due dates specified in the statutes for claiming deductions related to contributions to PF and ESI. The judgment highlighted the significance of legislative intent and the application of High Court decisions in resolving debatable issues related to income tax assessments.
|
