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2022 (10) TMI 154 - AT - Income TaxDelayed remittance of the employees contribution to PF - Appellant had remitted the same before the due date for filing of return of income under section 139(1) - HELD THAT - Bangalore Bench of the Tribunal in the case of M/s. ShakuntalaAgarbathi Company 2021 (10) TMI 1196 - ITAT BANGALORE by following the dictum laid down by the Hon ble jurisdictional High Court in the case of EssaeTeraokaPvt. Ltd 2014 (3) TMI 386 - KARNATAKA HIGH COURT had held that the assessee would be entitled to deduction of employees contribution to PF and ESI provided that the payments were made prior to the due date of filing of the return of income u/s 139(1) of the I.T.Act. It was further held by the ITAT that amendment by Finance Act, 2021, to section 36 1 va and 43B of the Act is not clarificatory. Amended provisions of section 43B as well as 36(1)(va) of the I.T.Act are not applicable for the assessment years under consideration. By following the binding decision of the Hon ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd 2014 (3) TMI 386 - KARNATAKA HIGH COURT the employees contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the Act is an allowable deduction. Accordingly, we decide this issue in favour of the assessee and the disallowance made by the Assessing Officer is deleted. Appeal filed by the assessee is allowed.
Issues:
1. Disallowance of delayed remittance of employees' contribution to PF. 2. Interpretation of amendments brought in by the Finance Act, 2021. 3. Applicability of deductions for employees' contribution to PF and ESI. Issue 1: Disallowance of delayed remittance of employees' contribution to PF: The appeal was against the order disallowing delayed remittance of employees' contribution to PF by the CIT(A). The assessee contended that the remittance was made before the due date for filing the income tax return under section 139(1) of the Act. The CIT(A) upheld the disallowance, considering the amendment brought in by the Finance Act, 2021. However, the Tribunal referred to previous judgments and held that the deduction is allowable if the payment was made before the due date of filing the return of income. The Tribunal emphasized that the amendment by Finance Act, 2021, is not clarificatory and is only prospective, not retrospective. Consequently, the disallowance made by the Assessing Officer was deleted, and the issue was decided in favor of the assessee. Issue 2: Interpretation of amendments brought in by the Finance Act, 2021: The CIT(A) confirmed the addition made by the Assessing Officer, considering the amendments as declaratory/clarificatory/explanatory and retrospective. However, the Tribunal disagreed, citing judgments that clarified the nature of the amendments. The Tribunal held that the amendments to section 36(1)(va) and 43B of the Act by Finance Act, 2021, are not clarificatory and are only prospective, effective from 01.04.2021. Various tribunal orders supported this view, emphasizing that the amendments do not apply retrospectively. The Tribunal concluded that the amended provisions were not applicable for the assessment years under consideration, and the disallowance was deleted based on the binding decision of the jurisdictional High Court. Issue 3: Applicability of deductions for employees' contribution to PF and ESI: The Tribunal compared the case with a previous judgment where the High Court had allowed deductions for employees' contribution to ESI if paid before the due date of filing the return of income. The Tribunal reiterated that the amendments by Finance Act, 2021, do not alter this position and are not retrospective. Relying on judicial pronouncements and previous tribunal decisions, the Tribunal directed the Assessing Officer to grant deduction for employees' contribution to ESI since the payment was made before the due date of filing the return of income. Consequently, the appeal was allowed in favor of the assessee. In conclusion, the Tribunal ruled in favor of the assessee, allowing deductions for employees' contributions to PF and ESI if paid before the due date of filing the income tax return, and rejecting the disallowance made by the Assessing Officer based on the amendments brought in by the Finance Act, 2021.
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