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TMI Blog2021 (11) TMI 679X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Appellant : Sri.R.E.Balasubramaniyam, CA For the Respondent : Sri.Ganesh R.Ghale, Standing Counsel ORDER This appeal at the instance of the assessee is directed against CIT(A) s order dated 30.06.2021. The relevant assessment year is 2018-2019. 2. The grounds raised reads as follows: 1. That the impugned order is opposed to facts and law insofar as it is prejudicial to the interest of the appellant. 2. That the ld.CIT(A) erred in confirming the order of the ld.AO in which he added back the contribution to employees provident fund and employees state insurance corporation without considering the fact that these were paid in the previous year. 3. That the ld.CIT(A) erred in confirming the order of the ld.AO and in doing so, he failed to appreciate that section 43B of the Income tax Act has an over-riding effect on section 36(1)(va) in accordance with the decision of the Hon ble Supreme Court which has held that deduction shall be allowed so long as the payment is made within the due date for furnishing return of income under section 139(1) of the Income-tax Act. 4. Without prejudice to the above grounds, the action of the ld.CIT(A) in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l before the Tribunal. The learned AR relied on the 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). 6. The learned Standing Counsel, on the other hand, relied on the judgment of the Hon ble Apex Court in the case of CIT Vs. Gold Coin Health Food Pvt. Ltd., reported in 304 ITR 308 (SC) and submitted that amendment by Finance Act, 2021, to section 36[1][va] and 43B of the Act is clarificatory and has got retrospective operation. The learned Standing Counsel further submitted that as against the judgment of the Hon ble Gujarat High Court in the case of CIT v. Gujarat State Road Transport Corporation reported in 366 ITR 370 (Guj.) , the assessee s SLP before the Hon ble Apex Court is pending. Therefore, it was prayed that the A.O. may be directed to follow the outcome of the judgment of the Hon ble Supreme Court. 7. The AR in rejoinder submitted the case law relied on by the learned DR viz., CIT Vs. Gold Coin Health Food Pvt. Ltd., (supra) is distinguishable on facts. It was submitted that the conclusion of the Hon ble Apex Court in the case of CIT Vs. Gold Coin Health Food Pvt. Ltd., (supra) is based on set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the employer shall, before paying the member, his wages, deduct his contribution from his wages and deposit the same together with his own contribution and other charges as stipulated therein with the provident fund or the fund under the ESI Act within fifteen days of the closure of every month pay. It is clear that the word contribution used in Clause (b) of Section 43B of the IT Act means the contribution of the employer and the employee. That being so, if the contribution is made on or before the due date for furnishing the return of income under sub-section (1) of Section 139 of the IT Act is made, the employer is entitled for deduction. 21. The submission of Mr.Aravind, learned counsel for the revenue that if the employer fails to deduct the employees' contribution on or before the due date, contemplated under the provisions of the PF Act and the PF Scheme, that would have to be treated as income within the meaning of Section 2(24)(x) of the IT Act and in which case, the assessee is liable to pay tax on the said amount treating that as his income, deserves to be rejected. 22. With respect, we find it difficult to endorse the view taken by the Gujarat High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibution to ESI since the assessee has made payment before the due date of filing of the return of income u/s 139(1) of the I.T.Act, It is ordered accordingly. 8.1 The learned Standing Counsel had relied on the judgment of the Hon ble Apex Court in the case of CIT Vs. Gold Coin Health Food Pvt. Ltd., (supra) to content that the amendment to section 36[1][va] and 43B of the Act is clarificatory. The judgment of the Hon'ble Apex Court in the case of CIT v. Gold Coin Health Food Pct. Ltd. (supra) is distinguishable. The Hon'ble Apex Court was considering the question of whether penalty can be imposed u/s.271(1)(c) of the Act for concealment of income where returned losses were reduced in assessment and there was no tax payable by the assessee. Earlier, the Hon'ble Apex Court in the case of Virtual Soft Systems in 289 ITR 83 [SC] had taken the view that no penalty could be levied on mere reduction in loss as there would be no tax payable by the assessee, which was a sinequo- non for imposition of penalty. Amendments were made by the Finance Act, 2002, to Section 271(1)(iii) of the Act by incorporating the expression if any and also in Explanation 4 setting out the mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epresent negative profit or in other words minus income. This aspect does not appear to have been noticed by the Bench in Virtual's case (supra). Reference to the - order by this Court dismissing the revenue's Civil Appeal No.7961 of 1996 in Commissioner of Income Tax v. Prithipal Singh and Co. is also not very important because that was in relation to the assessment year 1970-71 when Explanation 4 to Section 271 (1) ((c) was not in existence. The view of this Court in Horprasods case (supra) Leads to the irresistible conclusion that income also includes Losses. Explanation 4 (a) as it stood during the period 1.4.1976 to 1.4.2003 has to be considered in the background. 8. It appears that what the Finance Act intended was to make the position explicit which otherwise was implied. The recommendations of the Wanchoo Committee pursuant to which Explanation 4(a) was inserted w.e.f. 1.4.1976 needs to be noted. At para 2.74 it was noted as follows: 2.74 We are not unaware that linking concealment penalty to tax sought to be evaded can, at times, lead to anomalies. We would recommend that, in cases where the concealed income is to be, set off against Losses incurred by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was leviable thereon even during the period 1.4.1976 to 1.4.2003. Even in the Circular dated 24.7.1976, referred to above, the position was clarified by Central Bureau of Direct Taxes (in short' CBDT). It is stated that in a case where on setting of the concealed income against any loss incurred by the assessee under any 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 penalty would be imposable because in such a case the tax sought to be evaded will be tax chargeable on concealed income as if it is total income . 8.2 Thus, the judgment of the Hon'ble Apex Court in CIT Vs. Gold Coin Health Food [P] Ltd., [2008] 304 ITR 308 [SC], took into consideration the evolved jurisprudence on the point of whether income includes loss and has interpreted that even before the amendment with effect from 01.04.2003, there was liability to penalty. Hence, it was concluded by the Hon'ble Apex Court that the clarificatory nature of the amendment cannot be a ground to hold that earlier no penalty could be levied. However, the position in this case quite different as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one is to be found in the various principles of 'Interpretation of Statutes'. Vis-a-vis ordinary prose, legislation differs in its provenance, lay-out and features as also in the implication as to its meaning that arise by presumptions as to the intent of the maker thereof. 31. Of the various rules guiding how legislation has to be interpreted, one established rule is that unless a contrary intention appears, legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today rind in force and not tomorrow's backward adjustment of it. Our belief in the nature of the law is founded on the bed rock that every human being is entitled to arrange his affairs by relying on the existing law and should 'not find that his plans have been retrospectively upset. This principle of law is known as lex prospicit non respicit: law looks forward not backward. As was observed in Phillips vs. Eyre', a retrospective legislation is contrary to the general principl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment on some other person or on the public generally and where to confer such benefit appears to have been the legislators object, then the presumption would be that such legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural provisions as retrospective. In Government of India Et Ors. v. Indian Tobacco Association', the doctrine of fairness was held to be relevant factor to construe a statute conferring a benefit, in the context of it to be given a retrospective operation. The same doctrine of fairness, to hold that a statute was retrospective in nature, was applied in the case of Vijay v. State of Maharashtra Et Ors. It was held that where a law is enacted for the benefit of community as a whole, even in the absence of a provision the statute may be held to be retrospective in nature. However, we are confronted with any such situation here 8.4 The Hon'ble Apex Court in the case of CIT v. Essar Teleholdings Ltd. (2018) 401 ITR 445 (SC) considered the judgment of the Hon'ble Apex Court in the case of CIT v. Gold Coins Health Foods (P.) Ltd. (supra) and also the ju ..... X X X X Extracts X X X X X X X X Extracts X X X X
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