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2022 (9) TMI 1469 - AT - Income TaxDelayed employer and employee contribution to PF - assessment u/s 143(1) - contribution paid after due date prescribed under relevant Provident Fund Ac but before due date of filing of return of income - HELD THAT - We find that issue-in-dispute is covered in favour of the assessee as relying on case of DCIT v. M/s Maharashtra Tourism Development Corporation Ltd 2021 (7) TMI 1389 - ITAT MUMBAI disallowance is not sustainable in view of all these latest developments as the legislative amendments incorporated in section 36(1)(va) and 43B of the Act by the Finance Act, 2021 by inserting explanation 2 and explanation 5 to the respective provisions, are prospective in application with effect from 01.04.2021. No disallowance for delayed payment of PF could be made in the case of the assessee u/s 143(1) of the Act being debatable issue. Decided in favour of assessee.
Issues:
Disallowance of employer and employee contributions to PF, disallowance of employee's contribution to Provident Fund, applicability of legislative amendments, retrospective vs. prospective effect of amendments, fairness of adjustments made by Revenue u/s 143(1). Analysis: Issue 1: Disallowance of employer and employee contributions to PF - The assessee challenged the disallowance of employer and employee contributions to PF paid after the due date but before the due date of filing the return of income. The Tribunal referred to a previous case where it was held in favor of the assessee. The Tribunal emphasized that legislative amendments by the Finance Act, 2021, clarified the applicability of provisions, which were deemed prospective from 01.04.2021. Citing relevant case law, the Tribunal dismissed the Revenue's appeal, stating no infirmity in the order of the Commissioner of Income Tax (Appeals). Issue 2: Disallowance of employee's contribution to Provident Fund - In the case of AY 2019-20, the disallowance was specifically related to the employee's contribution to the Provident Fund. The Tribunal held that the legislative amendments under section 43B read with section 36(1)(va) of the Act would be effective from the assessment year 2021-22. Consequently, the Tribunal set aside the impugned order and directed the AO to allow the employees' contribution deposited by the assessee before filing the return of income. Issue 3: Applicability of Legislative Amendments - The Tribunal extensively discussed the legislative amendments incorporated in section 36(1)(va) and 43B of the Act by the Finance Act, 2021. It highlighted the prospective application of these amendments from 01.04.2021, emphasizing that no disallowance for delayed payment of PF could be made under section 143(1) of the Act due to the debatable nature of the issue. Issue 4: Fairness of Adjustments made by Revenue u/s 143(1) - The Tribunal, in various cases, criticized the adjustments made by the Revenue under section 143(1) of the Income Tax Act, labeling them as unfair, unjust, and beyond the scope of the Act. The Tribunal emphasized that additions based on debatable and controversial issues or retrospective amendments were not sustainable in law. It directed the Assessing Officer to delete such additions and confirmed the allowance of the contributions made by the assessee. In conclusion, the Tribunal allowed the appeals filed by the assessee, holding in favor of the assessee based on the debatable nature of the issues and the prospective application of legislative amendments. The judgments highlighted the importance of fairness, legality, and adherence to statutory provisions in tax assessments.
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