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2022 (2) TMI 217 - AT - Income TaxDelayed deposit of employee's contribution towards Provident Fund and ESI after the due date specified - the amount of contribution has been deposited well before the filing of return of income - the consistent claim of the assessee has remained that the Employee's deposit was with a marginal delay but it has been deposited well before the due date of filing of the Return of Income - HELD THAT - We hold that the disallowance sustained in the present appeal by the CIT(A) qua the employees' contribution despite late payment qua the specific Act cannot be made. Admittedly, in the facts of the present case the payment has been made well within the time line as set out under the Income Tax Act u/s. 139(1) of the Income Tax Act. Thus, admittedly the return of income was filed well within time after making the specific payments. The position of law that the Amendments carried out by the Finance Act, 2021 are prospective in nature and not declaratory stand well settled. The disallowance, accordingly, cannot be sustained - Decided in favour of assessee.
Issues Involved:
1. Whether the addition of employees' contribution towards Provident Fund (PF) and Employee State Insurance (ESI) deposited after the due date specified under the respective Acts but before the filing of the return of income is justified. Issue-wise Detailed Analysis: 1. Addition of Employees' Contribution to PF and ESI: Arguments Presented: - The assessee argued that the employees' contributions to PF and ESI were deposited after the due date specified under the respective Acts but before the due date for filing the return of income. This argument was supported by various orders of the Chandigarh Bench of the ITAT. - The Revenue, represented by the ld. Sr. DR, relied on the impugned order but did not provide any contrary view. Tribunal's Observations: - The Tribunal noted that the employees' contributions were indeed deposited after the due date specified under the respective Acts but before the due date for filing the return of income. - The First Appellate Authority (CIT(A)) had rejected the assessee's claim, considering the amendments made by the Finance Act, 2021, as clarificatory and retrospective in nature. Legal Precedents and Consistent Views: - The Tribunal referenced several High Court decisions that supported the assessee's claim, including: - Essae Teraoka Pvt. Ltd. (2014) 366 ITR 408 (Kar) - Peerless General Finance & Investment Co. (Calcutta High Court) - Ghatge Patil Transports Ltd. (2014) 368 ITR 749 (Bom) - AIMIL Limited (2010) 321 ITR 508 (Delhi) - Jaipur Vidyut Vitran Nigam Ltd. & Rajasthan Rajya Vidyut Utpadan Nigam Ltd. (2014) 363 ITR 307 (Rajasthan) - TATE Bank of Bikaner & Jaipur 363 ITR 70 (Rajasthan) - Lakhani Rubber Udyog (2009) 312 ITR 0014 (154 order) (Punjab & Haryana) - Bihar State Warehousing Corporation Ltd. (2017) 393 ITR 386 (Patna) - Sagun Foundry Private Limited (2017) 145 DTR 265 (All) - George Williamson (Assam) Limited (2006) 284 ITR 619 (Gauhati) Key Rulings from Coordinate Benches: - The Tribunal cited consistent rulings from various ITAT Benches, which held that the amendments made by the Finance Act, 2021, are prospective and not retrospective. Notable cases include: - Insta Exhibitions Pvt. Ltd. Vs Addl. CIT, New Delhi (ITA No. 6941/Del/2017) - M/s. Crescent Roadways Pvt. Ltd. V Dy. CIT, Hyderabad (ITA No. 1952/Hyd./2018) - Shri Sukhdev Singh, Mohali Vs ITO, Chandigarh (ITA 250/CHD/2021) Conclusion: - The Tribunal concluded that the amendments to Section 36(1)(va) and Section 43B by the Finance Act, 2021, are prospective, as clarified in the Notes on Clauses appended to the Finance Bill. - The disallowance of the employees' contribution deposited after the due date specified under the respective Acts but before the due date for filing the return of income is not sustainable. - The Tribunal directed the deletion of the impugned disallowance and allowed the appeals of the assessee. Order Pronounced: - The order was pronounced on 12th January 2022, and the appeals of the assessee were allowed. The disallowance of the employees' contribution to PF and ESI was directed to be deleted.
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