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TMI Blog2021 (11) TMI 329X X X X Extracts X X X X X X X X Extracts X X X X ..... luntarily made disallowance of the said amount (though inadvertently u/s 40A(3) the same needs to be deleted because the disallowance by A.O. u/s 43B of the I.T.Act tantamount to double taxation, which is impermissible in law. With these observations, I direct the A.O. to examine the issue afresh and pass an order after affording a reasonable opportunity of hearing to the assessee - ITA No.421/Bang/2021 - - - Dated:- 8-11-2021 - Shri George George K, Judicial Member For the Appellant : Sri.Vishal S. Rao, CA For the Respondent : Sri.Ganesh B.Ghale, Standing Counsel ORDER This appeal at the instance of the assessee is directed against CIT(A) s order dated 10.08.2021. The relevant assessment year is 2018-2019. 2. Two issues are raised in this appeal (i) Whether the CIT(A) has erred in upholding the addition of ₹ 6,21,831 made by the A.O. u/s 36(1)(va) of the I.T.Act disregarding the fact that the assessee has remitted the same before the due date specified u/s 139(1) of the I.T.Act (ii) Whether the CIT(A) has erred in sustaining the A.O. s addition of ₹ 9,915 u/s 43B of the I.T.Act disregarding that the amount has already been disallowed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he dtails submitted by the appellant. It is seen from a perusal of Audit Report in Form 3CD that at column No.26(i)(B)(b), the appellant has clearly mentioned that an amount of ₹ 9,915 under the head Goods Service Tax has not been paid on or before the due date of filing return of income u/s 139(1) as per the provision of section 43B(a). It is also seen that at the relevant Colum where disallowance u/s 40A(3) is to be mentioned. The appellant has not mentioned these details. Thus, it becomes clear that an amount of ₹ 9,915 has been disallowed u/s 43B only. Therefore, the entire argument of the appellant is misplaced. After considering the facts of the case, the grounds of appeal No.3 is dismissed. 5. Aggrieved, the assessee has filed this appeal before the Tribunal. As regards the disallowance of ₹ 6,21,831 is concerned, the learned AR submitted that an identical issue was considered in ITAT s order in the case of M/s. Shakuntala Agarbathi Company Vs. DICT in ITA No.385/Bang/2021 (order dated 21.10.2021), wherein it was clearly held that the amendment to section 36(1)(va) and 43B of the I.T.Act by the Finance Act, 2021 is only prospective. As regards the di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dment by Finance Act, 2021, to section 36[1][va] and 43B of the Act is not clarificatory. The relevant finding of the ITAT in the case of M/s. Shakuntala Agarbathi Company Vs. DCIT (supra), reads as follows: 7. We have heard rival submissions and perused the material on record. Admittedly, the assessee has remitted the employees' contribution to ESI before the due date for filing of return u/s 139(1) of the I.T.Act. The Hon'ble jurisdictional High Court in the case of Essae Teraoka (P.) Ltd. v. DCIT reported in 366 ITR 408 (Kar.) has categorically held that the assessee would be entitled to deduction of employees' contribution to ESI provided the payment was made prior to the due date of filing of return of income u/s 139(1) of the I.T.Act. The Hon'ble jurisdictional High Court differed with the judgment of the Hon'ble Gujarat High Court in the case of CIT v. Gujarat State Road Transport Corporation reported in 366 ITR 170 (Guj.). The Hon'ble High Court was considering following substantial question of law:- Whether in law, the Tribunal was justified in affirming the finding of Assessing Officer in denying the appellant's claim of deductions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgment of the Hon'ble jurisdictional High Court in the case of Essae Teraoka (P.) Ltd. v. DCIT (supra) the assessee would have been entitled to deduction of employees' contribution to ESI, if the payment was made prior to due date of filing of the return of income u/s 139(1) of the I.T.Act. Therefore, the amendment brought about by the Finance Act, 2021 to section 36[1][va] and 43B of the I.T.Act, alters the position of law adversely to the assessee. Therefore, such amendment cannot be held to be retrospective in nature. Even otherwise, the amendment has been mentioned to be effective from 01.04.2021 and will apply for and from assessment year 2021-2022 onwards. The following orders of the Tribunal had categorically held that the amendment to section 36[1][va] and 43B of the Actby Finance Act, 2021 is only prospective in nature and not retrospective. (i) Dhabriya Polywood Limited v. ACIT reported in (2021) 63 CCH 0030 Jaipur Trib. (ii) NCC Limited v. ACIT reported in (2021) 63 CCH 0060 Hyd Tribunal. (iii) Indian Geotechnical Services v. ACIT in ITA No.622/Del/2018 (order dated 27.08.2021). (iv) M/s.Jana Urban Services for Transformation Private Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Virtual's case (supra). Pointing out one of the important tests at para 51 it was observed that even if the statute does contain a statement to the effect that the amendment is clarificatory or declaratory, that is not the end of the matter. The Court has to analyse the nature of the amendment to come to a conclusion whether it is in reality a clarificatory or declaratory prsvision. Therefore, the date from which the amendment is made operative does not conclusively decide the question. The Court has to examine the scheme of the statute prior to the amendment and subsequent to the amendment to determine whether amendment is clarificatory or substantive. In Reliance Jute and Industries Ltd. vs. Commissioner of Income Tax, West Bengal (1979 (120) ITR 921) it was observed, by this Court that the law to be applied in income tax assessments is the law in force in the assessment year unless otherwise provided expressly or by necessary implication. Before proceeding further, it will be necessary to focus on the definition of the expression 'income' in the statute. Section 2 (24) defines' income' which is an inclusive definition, and includes losses i. e. negati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have been concealed. In a case, however, where on setting off the concealed income against any loss incurred by the assessee under other head of income or brought forward from earlier years, the' total income is reduced to a figure Lower than the concealed income or even to a minus figure, 'the tax sought to be evaded' will mean the tax chargeable on the concealed income as if it were the total income. Another exception to the general definition of the expression 'tax sought to be evaded' given earlier is a case to which Explanation 3 applies. Here, the tax sought to be evaded will be the tax chargeable on the entire total income assessed. 10. A combined reading of the Committee's e-commendations and the Circular makes the position clear that Explanation 4(a) to Section 271 (1) (c) intended to levy the penalty not only in a case where after addition of concealed income, a loss returned, after assessment becomes positive income but also in a case where addition of concealed income reduces the returned loss and finally the assessed income is also a loss or a minus figure. Therefore, even during the period between 1.4.1.976 to 1.4.2003 the position was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Furthermore, in the present case, Legislature has expressly given only prospective effect to these Explanations as is evident from the Memorandum Explaining the Provisions in the Finance Bill, 2021, by stating that the said amendment i.e., the insertion of another Explanation to the already existing explanation to clause [va] to sub-section [1] of section [36] of the Act, will take effect from 1st April, 2021 and will accordingly apply to the assessment year 2021-2022 and subsequent assessment years. In contradistinction the relevant Finance Act, 2003 amending section 271(1)(iii) and Explanation 4 did not speak of application and merely provided that the amendments will take effect from 01.04.2003 [reproduced in para 5 of the judgment in case of Gold Coin (supra)]. 7.3 Furthermore, a Constitution Bench of the Hon'ble Apex Court of 5 judges in the case of CIT Vs. Vatika Township [P] Ltd., [2014] 367 ITR 466 [SC], has held as under: General Principles concerning retrospectivity 30. A legislation, be it a statutory Act or a statutory Rule or a statutory Notification, may physically consists of words printed on papers. However, conceptually it is a great deal more th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n obvious omission in a former legislation or to explain a former legislation. We need not note the cornucopia of case law available on the subject because aforesaid legal position clearly emerges from the various decisions and this legal position was conceded by the counsel for the parties. In any case, we shall refer to few judgments containing these dicta, a little later. 33. The obvious basis of the principle against retrospectivity is the principle of fairness, which must be the basis of every legal rule as was observed in the decision reported in L 'Office Cherifien des Phosphates v. Yamashita-Shinnihon Steamship Co. Ltd. Thus, legislations which modified accrued rights or which impose obligations or impose new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect; unless the legislation. is for purpose of supplying an obvious omission in a former legislation or to explain a former legislation. We need not note the cornucopia of case law available on the subject because aforesaid legal position clearly emerges from the various decisions and this legal position was conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt relied on by the CIT(A) in the case of CIT v. Cold Coins Health Foods (P.) Ltd. (supra) does not have application to the present case. 7.5 Since, the assessment year concerned in this case being 2018-2019, I hold that the amendment to section 36(1)(va) and 43B of the I.T.Act by Finance Act, 2021 does not have application. Therefore, I direct the A.O. to delete the disallowance of ₹ 6,21,831 being employees contribution to PF and ESI, since the same has been paid prior to the due date of filing of the return u/s 139(1) of the I.T.Act. It is ordered accordingly. 7.6 As regards the disallowance of GST of ₹ 9,915 is concerned, I notice that an identical figure has been disallowed by the assessee voluntarily in the return of income filed u/s 40A(3) of the I.T.Act. If an identical amount has been disallowed inadvertently u/s 40A(3) of the I.T.Act, then further disallowance u/s 43B of the I.T.Act by the A.O. would amount to double taxation. Therefore, I restore this issue to the files of the A.O. The AO is directed to examine whether the assessee has voluntarily made disallowance of ₹ 9,915 of GST since the same was not paid before the due date of filing of re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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