9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (12) TMI 693 - AT - Income TaxDelayed employee s share of contribution to PF and ESI - scope of amendment to the provisions of Sec.36(1)(va) and Sec.43B of the Act, by the Finance Act, 2021 - HELD THAT - Hon ble Karnataka High Court in the case of Essae Teraoka Pvt. Ltd., 2014 (3) TMI 386 - KARNATAKA HIGH COURT has taken the view that employee s contribution u/s 36(1)(va) of the Act would also be covered under section 43B of the Act and therefore if the share of the employee s share of contribution is made on or before due date for furnishing the return of income under section 139(1) of the Act, then the assessee would be entitled to claim deduction.Therefore, the issue is covered by the decision of the Hon ble Karnataka High Court. Whether the amendment to the provisions to section 43B and 36(1)(va) of the Act by the Finance Act, 2021, has to be construed as retrospective and applicable for the period prior to 01.04.2021 also? - We find that the explanatory memorandum to the Finance Act, 2021 proposing amendment in section 36(1)(va) as well as section 43B is applicable only from 01.04.2021. These provisions impose a liability on an assessee and therefore cannot be construed as applicable with retrospective effect unless the legislature specifically says so. In the decisions referred to by us in the earlier paragraph of this order on identical issue the tribunal has taken a view that the aforesaid amendment is applicable only prospectively i.e., from 1.4.2021. We are therefore of the view that the impugned additions made under section 36(1)(va) of the Act in both the Assessment Years deserves to be deleted. Appeal of assessee allowed.
Issues:
1. Disallowance of employee's share of contribution to PF/ESI by CPC in intimation under section 143(1) of the Income Tax Act, 1961. 2. CIT(A) upholding the disallowance and referring to amendments made by the Finance Act, 2021 to sections 36(1)(va) and 43B of the Act. 3. Legal distinction between employees' and employer's contributions under the Act. 4. Applicability of the amendments made by the Finance Act, 2021 with retrospective effect. 5. Interpretation of the Karnataka High Court's decision regarding employee's contribution under section 36(1)(va) and section 43B of the Act. 6. Tribunal's view on the prospective application of the amendments. Analysis: 1. The appeals and stay petitions were filed by the assessee against two orders of CIT(A) relating to Assessment Years 2018-19 and 2019-20, disputing the disallowance of employee's share of contribution to PF/ESI by CPC in the intimation under section 143(1) of the Act. 2. The CIT(A) upheld the disallowance, citing amendments made by the Finance Act, 2021 to sections 36(1)(va) and 43B of the Act, emphasizing the due dates for payment of employee's and employer's contributions and the consequences of delay in payment. 3. The legal distinction between employees' and employer's contributions under the Act was highlighted, indicating that failure to pay employee's contribution before the prescribed due date negates the employer's deduction permanently, while delay in employer's contribution payment leads to deferment of deduction under section 43B. 4. The CIT(A) deemed the amendments by the Finance Act, 2021 as declaratory/clarificatory in nature, applying retrospectively by necessary intendment of deeming nature expressly stated therein. 5. The Karnataka High Court's decision on employee's contribution under section 36(1)(va) and section 43B was considered, concluding that the amendments by the Finance Act, 2021 were prospective from 01.04.2021 and not applicable retrospectively. 6. The Tribunal concurred with the view that the amendments were prospective, leading to the deletion of the additions made under section 36(1)(va) for both Assessment Years, ultimately allowing the appeals of the assessee and dismissing the stay petitions as infructuous.
|
