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2022 (5) TMI 1345 - AT - Income TaxDelayed Employee's Contribution towards PF and ESIC - amendment was brought in finance Act 2021 w.e.f 1-4- 2021 - HELD 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 shall be applicable prospectively. 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 employee s contribution of Provident fund ESIC before the due date of return of income 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:
1. Addition of Employees' contribution towards Provident Fund and ESIC. 2. Applicability of amended provisions of Sections 36(va) and 43B of the Income Tax Act. 3. Interpretation of due date for depositing contributions. 4. Validity of the order passed by the CIT(A). Issue 1: Addition of Employees' contribution towards Provident Fund and ESIC The appeal was filed against the National Faceless Appeal Centre's order regarding the addition of Rs.22,95,056 for late payment of Employees' contribution towards Provident Fund and ESIC. The Revenue contended that the contributions were paid after the due date specified under the respective Act. The assessee argued that the contributions were deposited before the due date of filing the return of income u/s 139(1) of the Income Tax Act. The Tribunal considered similar cases and held that the impugned adjustment under section 143(1) was vitiated in law, deleting the addition. Issue 2: Applicability of amended provisions of Sections 36(va) and 43B The Revenue argued that the amendment introduced by the Finance Act 2021 was retrospective and applicable to earlier years. However, the assessee contended that the amendment was prospective, effective from 1st April 2021. The Tribunal analyzed the law and held that the amendment to section 36(1)(va) would not be applicable to the assessment year 2018-19. As the contributions were deposited before the due date of the return of income, the order of the CIT(A) was set aside, and the appeal was allowed in favor of the assessee. Issue 3: Interpretation of due date for depositing contributions The Tribunal examined the definition of 'due date' under Explanation to Section 36(1)(va) and considered judicial decisions on the matter. It was concluded that the due date for depositing contributions was not decisive for determining the disallowance in the computation of total income. The Tribunal emphasized that the auditor's report, stating the due date, did not lead to disallowance if payments were made before the due date of filing the income tax return under section 139(1). Issue 4: Validity of the order passed by the CIT(A) The CIT(A) confirmed the addition of Employees' contribution towards Provident Fund and ESIC, leading to the appeal before the Tribunal. The Tribunal found that the CIT(A) did not consider the facts and laws applicable to the assessment year. Considering the judicial decisions and the law, the Tribunal set aside the CIT(A)'s order and directed the assessing officer to delete the disallowance, allowing the grounds of appeal in favor of the assessee. In conclusion, the Tribunal allowed the appeal, emphasizing that the amendment to section 36(1)(va) was not applicable to the relevant assessment year, and the contributions were deposited before the due date of the return of income. The Tribunal's decision was based on a thorough analysis of the legal provisions, judicial decisions, and the specific facts of the case.
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