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2022 (3) TMI 617 - AT - Income TaxAddition u/s 36(1)(va) - delayed payment of employees contribution towards PF ESI - whether the amendment brought to Section 36(1)(va) as well as 43B of the Act is applicable retrospective or from assessment year 2021-22 as it is specifically stated in the memorandum of Finance Bill, 2021? - HELD THAT - As relying on M/S KOGTA FINANCIAL (INDIA) LTD. VERSUS CPC, BENGALURU. 2022 (1) TMI 250 - ITAT JAIPUR this issue was decided in favour of the assessee by holding that amendment in Section 36(1)(va) as well as Section 43B of the Act by way of inserting the explanation vide Finance Bill, 2021 are applicable only from A.Y. 2021-22 and subsequent assessment years and therefore, the said amendment is not applicable to the assessment year under consideration. Appeal of the assessee is allowed. Also see CHATRU MAL GARG VERSUS ACIT, CIRCLE 1, FARIDABAD. 2021 (10) TMI 1282 - ITAT DELHI - Decided against revenue.
Issues Involved:
1. Disallowance of employee’s contribution towards PF and ESI due to delayed payment. 2. Applicability of the amendment to Section 36(1)(va) and Section 43B by the Finance Act, 2021. Issue-wise Detailed Analysis: 1. Disallowance of Employee’s Contribution towards PF and ESI due to Delayed Payment: The primary issue in this appeal is the disallowance of ?4,26,382/- under Section 36(1)(va) due to the delayed payment of employees' contribution towards PF and ESI. The assessee filed a return of income declaring a total income of ?49,52,150/-, which was processed under Section 143(1) by CPC, Bangalore, determining total income at ?53,81,470/-. The adjustment of ?4,26,382/- was made due to the late deposit of employees' contributions to PF and ESI, considered deemed income under Section 36(1)(va) read with Section 2(24)(x). The assessee contended that the contributions were deposited before the due date for filing the return of income under Section 139(1) of the Income Tax Act, 1961. The CIT(A) confirmed the addition, citing the clarificatory amendments made by the Finance Act, 2021, which were not applicable retrospectively. 2. Applicability of the Amendment to Section 36(1)(va) and Section 43B by the Finance Act, 2021: The Tribunal considered whether the amendment brought by the Finance Act, 2021, to Section 36(1)(va) and Section 43B was applicable retrospectively. The Tribunal noted that prior to the amendment, the issue was settled in favor of the assessee by various High Courts, including the Jurisdictional High Court, which held that contributions deposited before the due date for filing the return of income under Section 139(1) were allowable. The Tribunal referenced its earlier decision in the case of M/s Kogta Financial (India) Ltd. Vs CPC, where it was held that the amendments introduced by the Finance Act, 2021, were applicable only from A.Y. 2021-22 and subsequent years. Therefore, these amendments could not be applied retrospectively to the assessment year under consideration (A.Y. 2018-19). The Tribunal also cited the Delhi Bench's decision in Chatru Mal Garg Vs ACIT, which held that the amendments by the Finance Act, 2021, would take effect from 1st April 2021 and apply to A.Y. 2021-22 and subsequent years. The Tribunal emphasized that the binding precedents of the Jurisdictional High Court must be followed, which were in favor of the assessee. Conclusion: The Tribunal concluded that the disallowance of ?4,26,382/- on account of employees' contribution towards PF and ESI deposited before the due date for filing the return of income under Section 139(1) was not justified. The amendments brought by the Finance Act, 2021, were not applicable to the assessment year 2018-19. Consequently, the disallowance was deleted, and the appeal of the assessee was allowed. Order Pronouncement: The order was pronounced in the open court on 11/03/2022.
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