9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (12) TMI 555 - AT - Income TaxDisallowance u/s 36(1)(va) - late remittance of employees contribution to PF and ESI under the respective Acts - scope of amended provisions of section 43B as well as 36(1)(va) - As contended that assessee has paid the employees contribution prior to the due date of filing of return under section 139(1) - HELD THAT - On identical facts, the Bangalore Bench of the Tribunal in the case of M/s. Shakuntala Agarbathi Company 2021 (10) TMI 1196 - ITAT BANGALORE by following the dictum laid down in the case of Essae Teraoka Pvt. 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. The 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 Vs. DCIT (supra), the employees contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the I.T.Act is an allowable deduction. Accordingly, we decide this issue in favour of the assessee
Issues Involved:
1. Applicability of High Court judgments regarding employee contribution paid before filing of income tax returns. 2. Retrospective applicability of the amendment to section 36(1)(va). 3. Clarification of the amendment's applicability from April 1, 2022. Issue-wise Detailed Analysis: 1. Applicability of High Court Judgments Regarding Employee Contribution Paid Before Filing of Income Tax Returns: The appellant argued that the CPC and CIT(A) did not adhere to the Karnataka High Court's judgments in the cases of Essae Teraoka (P) Ltd. v. DCIT and Spectrum Consultants India (P) Ltd. v. CIT, which allowed deductions for employee contributions paid before the due date for filing income tax returns. The Tribunal noted that the Bangalore Bench of the Tribunal in the case of M/s. Shakuntala Agarbathi Company Vs. DCIT had followed the Karnataka High Court's decision in Essae Teraoka Pvt. Ltd Vs. DCIT, which held that the assessee is entitled to a deduction of employees' contributions to PF and ESI if the payments were made before the due date of filing the return of income under section 139(1) of the Act. 2. Retrospective Applicability of the Amendment to Section 36(1)(va): The appellant contended that the amendment to section 36(1)(va) by the Finance Act, 2021, is not applicable retrospectively. The Tribunal referenced the Supreme Court's decision in M.M. Aqua Technologies Limited v. CIT, which stated that a retrospective provision in a taxing Act intended "for the removal of doubts" cannot be presumed to be retrospective if it changes the law as it stood earlier. The Tribunal concluded that the amendment to section 36(1)(va) and 43B of the Act by the Finance Act, 2021, alters the law adversely to the assessee and cannot be considered retrospective. The Tribunal also cited several other Tribunal orders that held the amendment to section 36(1)(va) and 43B by the Finance Act, 2021, is prospective and not retrospective. 3. Clarification of the Amendment's Applicability from April 1, 2022: The appellant argued that the memorandum explaining the provision of the Finance Bill, 2021, clearly states that the amendment to section 36(1)(va) is applicable from April 1, 2022, and should not be applied to AY 2019-20. The Tribunal agreed, noting that the amendment is explicitly stated to be effective from April 1, 2021, and will apply from assessment year 2021-2022 onwards. The Tribunal emphasized that the Legislature has expressly given only prospective effect to these amendments, as evident from the Memorandum Explaining the Provisions in the Finance Bill, 2021. Conclusion: The Tribunal directed the Assessing Officer to grant the deduction in respect of employees' contributions to ESI since the assessee made the payment before the due date of filing the return of income under section 139(1) of the I.T. Act. The appeal filed by the assessee was allowed, and the disallowance made by the Assessing Officer was deleted. Order Pronounced: The appeal was allowed, and the order was pronounced on December 8, 2021.
|
