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2022 (6) TMI 95 - AT - Income TaxDisallowance of delayed remittance of employees contribution to PF ESI beyond the due date as prescribed in the relevant Acts - HELD THAT - In the case of the assessee, it had remitted the employee s contribution towards PF/ESIC beyond the due date for payment as specified in PF/ESIC Act, but within the due date for filing the return of income, therefore,we consider that Ld. CIT(A) is not justified in disallowing the impugned claim of deduction of the assessee. Accordingly, we decide this issue in favour of the assessee.
Issues Involved:
1. Confirmation of assessment made by NFAC. 2. Disallowance under section 36(1)(va) due to delay in deposit of employee's contribution towards PF/ESI. 3. Application of amended provisions of section 36(1)(va) and section 43B retrospectively. Issue-Wise Detailed Analysis: 1. Confirmation of Assessment by NFAC: The assessee challenged the NFAC's confirmation of the assessment made by the AO CPC, which resulted in an assessed income of Rs. 8,68,84,190/- against the returned income of Rs. 8,53,93,350/-. The primary contention was that the assessment lacked proper basis and did not consider the facts and circumstances of the case. 2. Disallowance Under Section 36(1)(va) Due to Delay in Deposit of Employee's Contribution Towards PF/ESI: The AO CPC disallowed Rs. 14,90,835/- under section 36(1)(va) due to the delayed deposit of employee's contributions to PF/ESI beyond the due date specified in the relevant Acts. The assessee argued that the contributions were deposited before the due date for filing the return under section 139(1) and cited judicial pronouncements from the Bombay High Court (CIT v. Hindustan Organics Chemicals Ltd. and GhatgePatil Transports Ltd.) supporting that such contributions should not be disallowed if deposited before the return filing due date. 3. Application of Amended Provisions of Section 36(1)(va) and Section 43B Retrospectively: The NFAC relied on the amendments introduced by the Finance Act, 2021, to sections 36(1)(va) and 43B, applying them retrospectively to sustain the disallowance. The assessee contended that these amendments are prospective, effective from 01.04.2021, and should not apply to the assessment year 2019-20. This stance was supported by the ITAT Bangalore (Mavinahalli Shivananjappa Vijay Kumar) and ITAT Chennai (Adhyar Anand Bhavan Sweets India P. Ltd.), which held that the amendments are prospective and applicable from assessment year 2021-22. Judgment Analysis: The Tribunal reviewed the facts and judicial precedents. It noted that the contributions were deposited before the return filing due date under section 139(1). The Tribunal referenced the decisions of the Hon'ble Jurisdictional Bombay High Court and ITATs, which clarified that the amendments to sections 36(1)(va) and 43B are prospective. Citing the Supreme Court's principle in CIT v. Vatika Township (P) Ltd., the Tribunal emphasized that amendments imposing liabilities should not be applied retrospectively unless explicitly stated by the legislature. The Tribunal concluded that the CIT(A) was not justified in disallowing the deduction for the employee’s contributions deposited before the return filing due date. Consequently, it allowed the assessee's appeal and deleted the disallowance made by the AO. Final Decision: The Tribunal allowed the appeal in favor of the assessee, thereby deleting the disallowance of Rs. 14,90,835/- under section 36(1)(va). Since the main issue was resolved in favor of the assessee, the Tribunal did not find it necessary to adjudicate on ground no. 5. Order Pronouncement: The order was pronounced in the open court on 27.04.2022.
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