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2022 (4) TMI 715 - AT - Income TaxBelated remittance of employee s contribution to PF ESI - HELD THAT - In this case, the assessee claims that it has remitted employees contribution to PF ESI on or before due date specified u/s.139(1) of the Act, for filing return of income. CIT(A), after considering relevant facts and following clarificatory amendments made by Finance Act, 2021 to section 36(1)(va) and section 43B rejected the arguments advanced by the assessee and confirmed disallowance made by the AO as said late payments are not covered under section 43B of the Act. We find that amendment brought to the statute by insertion of Explanation 1 to section 36(1(va) by the Finance Act, 2021 w.e.f. 01.04.2021 is considered to be prospective in nature as per the decision of the co-ordinate Bench of ITAT., Chennai in 2021 (12) TMI 558 - ITAT CHENNAI where it was held that insertion of Explanation 1 to said section cannot be considered as retrospective in nature and thus, belated payment of employees contribution to PF ESI after due date specified under respective Act, but before due date for filing of return of income u/s.139(1) of the Act is allowable deduction - we direct the Assessing Officer to delete additions made towards disallowance of employees contribution to PF ESI u/s.36(1(va) r.w.s. 2(24)(x) - Decided in favour of assessee.
Issues Involved:
1. Condonation of delay in filing appeal due to Covid-19 lockdown. 2. Disallowance of belated remittance of employees' contribution to PF & ESI. 3. Retrospective applicability of amendments made to Sec. 36(1)(va) and Sec. 43B by the Finance Act, 2021. 4. Consideration of case laws and submissions by the appellant. Issue 1: Condonation of Delay: The appeal was filed 42 days late due to the Covid-19 lockdown. The appellant sought condonation of delay citing the Hon'ble Supreme Court's extension of limitation periods due to the pandemic. The delay was condoned by the ITAT Chennai, considering the general exemption provided by the Supreme Court and in the interest of natural justice. Issue 2: Disallowance of Belated Remittance: The appellant, engaged in electrical equipment services, filed its return for AY 2018-19 but faced disallowance of ?46,12,420 under Sec. 36(1)(va) for belated remittance of employees' PF & ESI contributions. The CIT(A) partly allowed the appeal but confirmed the disallowance. The appellant argued that remittances made before the due date for filing returns should be allowed as deductions, even if beyond statutory due dates. The ITAT referred to a Madras High Court case and held in favor of the appellant, allowing the deduction. Issue 3: Retrospective Applicability of Amendments: The ITAT considered the retrospective applicability of amendments to Sec. 36(1)(va) by the Finance Act, 2021. The appellant contended that the amendments were clarificatory and retrospective, while the department argued for retrospective application. Referring to a co-ordinate Bench decision, the ITAT held that the amendments were prospective, not retrospective. Consequently, the disallowance of employees' contributions to PF & ESI was directed to be deleted. Issue 4: Consideration of Case Laws and Submissions: The appellant raised grounds against the CIT(A)'s order, arguing that it was erroneous and illegal. The ITAT analyzed the arguments, case laws, and amendments made by the Finance Act, 2021. By considering relevant precedents and the legislative intent behind the amendments, the ITAT ruled in favor of the appellant, directing the Assessing Officer to delete the disallowance of employees' contributions to PF & ESI. In summary, the ITAT Chennai allowed the appeal, condoning the delay in filing due to Covid-19 lockdown, and ruled in favor of the appellant regarding the disallowance of belated remittance of employees' contributions to PF & ESI. The ITAT held that the amendments to Sec. 36(1)(va) were prospective, not retrospective, leading to the deletion of the disallowance. The decision was based on legal interpretations, case laws, and the legislative intent behind the amendments.
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