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TMI Blog2021 (11) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... ion by way of adjustment while processing the return of income u/s 143(1) so made by the CPC towards the deposit of the employees s contribution towards ESI and PF though paid before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted. - Decided in favour of assessee. - ITA. No. 105/JP/2021 (Assessment Year : 2019-20) - - - Dated:- 28-10-2021 - SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SINGH YADAV, AM Assessee by : Shri S.L. Poddar (Adv.) Revenue by : Shri B.K. Gupta (Pr.CIT) ORDER PER: VIKRAM SINGH YADAV, A.M. This is an appeal filed by the assessee against the order of ld. CIT(A), Delhi (NFAC) dated 23.08.2021 for the assessment year 2019- 20 wherein the assessee has taken the following grounds of appeal:- Under the facts and circumstances of the case the learned CIT(A) has erred in confirming the addition of ₹ 6,28,972/- as per the provision of section 2(24)(x) read with section 36(1)(va) of the Income Tax act, 1961 on account of delay in payment of ESI and PF made by CPC u/s 154 of the Income Tax Act, 1961. 2. Under the facts and circumstances of case CPC as no power to make adjustment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the ld. DR submitted that as per details furnished in the tax audit report, the payment of employee s contribution of PF/ESI amounting to ₹ 6,28,972/- was not made within the prescribed due date U/s 36(1)(va) of the Act and since these amount were not disallowed in the return of income filed by the assessee, the variance between the tax audit report and ITR has been duly flagged by the CPC in the computerized processing and disallowance U/s 143(1)(a)(iv) on the basis of fact furnished by the assessee was made which clearly fails within ambit of prima facie adjustment to be carried out U/s 143(1)(a)(iv) of the Act. Further, reliance was placed on the amendment brought in by the Finance Act, 2021 wherein the explanation to Section 36(1)(va) has been introduced. It was submitted from the said amendment, it is evident that the law is and has always very clear i.e. employee s contribution to specified fund will not be allowed as deduction U/s 36(1)(va) if there is delay in deposit even by a single day as per the due dates mentioned in the respective legislation. It is also clear that the amendments are only declaratory/clarificatory in nature and are therefore, applicable with r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sively examining the matter and considering the various decisions of the Hon ble Supreme Court and various other High Courts has decided the matter in favour of the assessee. In the said decision, the Hon ble High Court was pleased to held as under: 20. On perusal of Sec.36(1)(va) and Sec.43(B)(b) and analyzing the judgments rendered, in our view as well, it is clear that the legislature brought in the statute Section 43(B)(b) to curb the activities of such tax payers who did not discharge their statutory liability of payment of dues, as aforesaid; and rightly so as on the one hand claim was being made under Section 36 for allowing the deduction of GPF, CPF, ESI etc. as per the system followed by the assessees in claiming the deduction i.e. accrual basis and the same was being allowed, as the liability did exist but the said amount though claimed as a deduction was not being deposited even after lapse of several years. Therefore, to put a check on the said claims/deductions having been made, the said provision was brought in to curb the said activities and which was approved by the Hon'ble Apex Court in the case of Allied Motors (P) Ltd. (supra). 21. A conjoint rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d decision has subsequently been followed in CIT vs. Jaipur Vidyut Vitran Nigam Ltd. (supra), CIT vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. (supra), and CIT vs Rajasthan State Beverages Corportation Limited (supra). In all these decisions, it has been consistently held that where the PF and ESI dues are paid after the due date under the respective statues but before filing of the return of income under section 139(1), the same cannot be disallowed under section 43B read with section 36(1)(va) of the Act. 17. We further note that though the ld. CIT(A) has not disputed the various decisions of Hon ble Rajasthan High Court but has decided to follow the decisions rendered by the Hon ble Delhi, Madras, Gujarat and Kerala High Courts. Given the divergent views taken by the various High Courts and in the instant case, the fact that the jurisdiction over the Assessing officer lies with the Hon ble Rajasthan High Court, in our considered view, the ld CIT(A) ought to have considered and followed the decision of the jurisdictional Rajasthan High Court, as evident from series of decisions referred supra, as the same is binding on all the appellate authorities as well as the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicable for the period prior to 01.04.2021 also. On this aspect, 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. 7. In light of the aforesaid discussions and in the entirety of facts and circumstances of the case and following the consistent decisions taken by the various Benches of the Tribunal, the addition by way of adjustment while processing the return of income u/s 143(1) amounting to ₹ 6,28,972/- so made by the CPC towards the deposit of the employees s contribution towards ESI and PF though paid before the due date of filing of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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