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2022 (5) TMI 596 - AT - Income TaxDelay in payment towards Provident Fund, ESIC and any Other Welfare Fund u/s 36(1)(va) r.w.s 43B and 2(24)(x) - HELD THAT - As find that the amendment was brought in finance Act 2021 w.e.f 1-4-2021.The law was not framed/amended in the relevant Assessment year and any legal proposition which cast additional burden/liability on the assessee cannot be implemented retrospectively. We considering the overall facts, circumstances, judicial decisions, are of the reasoned view that the amendment to section 36(1)(va) of the Act will not be applicable to Assessment Year 2018-19. The assessee has deposited the employees contribution of provident fund ESIC before the due date u/sec 139(1) of the Act. Accordingly, we set-aside the order of the CIT(A) and direct the assessing officer to delete the disallowance and allow the grounds of appeal in favour of the assessee.
Issues Involved:
1. Disallowance of Rs. 33,73,061/- for delayed payment of Provident Fund (PF), Employee State Insurance Corporation (ESIC), and other welfare funds under section 36(1)(va) read with sections 43B and 2(24)(x) of the Income Tax Act. 2. Applicability of amendments made by the Finance Act, 2021, to section 36(1)(va) and 43B of the Income Tax Act. Issue-wise Detailed Analysis: 1. Disallowance of Rs. 33,73,061/- for Delayed Payment of PF, ESIC, and Other Welfare Funds: The assessee filed an appeal against the order of the Commissioner of Income Tax (Appeals), NFAC, Delhi, which confirmed the disallowance of Rs. 33,73,061/- on account of alleged delay in payment towards PF, ESIC, and other welfare funds. The assessee argued that the disallowance was incorrect as the payments were made before the due date of filing the return of income under section 139(1). The assessee cited judgments from the Bombay High Court and the Supreme Court, which held that payments made before the due date of filing the return should be allowed as deductions. The Tribunal considered these arguments and noted that the relevant payments were indeed made before the due date of filing the return. 2. Applicability of Amendments by the Finance Act, 2021: The Tribunal examined whether the amendments introduced by the Finance Act, 2021, to section 36(1)(va) and 43B, which specify that payments must be made within the due date under the respective Acts, were retrospective. The Tribunal referred to several judicial pronouncements, including the Supreme Court's decision in M.M. Aqua Technologies Limited v. CIT, which clarified that retrospective provisions in a taxing Act cannot be presumed to be retrospective if they alter the existing law. The Tribunal also cited multiple Tribunal decisions supporting the view that the amendments are prospective and applicable from the assessment year 2021-2022 onwards. Consequently, the Tribunal held that the amendments do not apply to the assessment year 2018-2019. Conclusion: The Tribunal concluded that the disallowance of Rs. 33,73,061/- was not justified as the payments were made before the due date of filing the return under section 139(1). The amendments introduced by the Finance Act, 2021, were held to be prospective and not applicable to the assessment year 2018-2019. Therefore, the Tribunal directed the assessing officer to delete the disallowance and allowed the appeal in favor of the assessee. Order: The appeal filed by the assessee was allowed, and the order was pronounced in the open court on 30.03.2022.
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