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TMI Blog2021 (12) TMI 749X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of the Hon ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT (supra), the employees contribution paid by the assessee before the due date of filing of return of income u/s 139(1) of the I.T.Act is an allowable deduction. Accordingly, we decide this issue in favour of the assessee. - ITA No.484/Bang/2021 ITA No.485/Bang/2021 - - - Dated:- 24-11-2021 - Shri Chandra Poojari, AM And Shri George George K, JM Appellant by : Smt.Sunaina Bhatia, CA Respondent by : Smt.Priyadarshini Besaganni, JCIT-DR ORDER Per George George K, JM These appeals at the instance of the assessee are directed against orders of the CIT(A), both dated 11.08.2021. The relevant assessment years are 2017-2018 and 2018- 2019. 2. Since the grounds raised in both these appeals are similar, except variance in figures, the grounds raised for assessment year 2017-2018 is reproduced below:- 1. The orders of the authorities below in so far as they are against the appellant are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case. 2. The learned Commissioner of Income tax [Appeals] 1 National Faceless A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act, under the facts and in the circumstances of the appellant's case. 6. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs. 3. Brief facts of the case are as follows: For the assessment years 2017-2018 and 2018-2019, the returns of income were filed on 15.02.2019 and 31.10.2018, declaring income of ₹ 43,41,681 and ₹ 1,26,18,862, respectively. The assessee was served with an intimation u/s 143(1) of the I.T.Act by assessing a sum of ₹ 59,56,881 for assessment year 2017-2018 and ₹ 1,36,16,349 for assessment year 2018-2019. The reason for the difference between the returned income and the assessed income u/s 143(1) of the I.T.Act was on account of disallowance of sum of ₹ 16,15,197 ( for A.Y.2017-2018) and ₹ 9,97,487 (for A.Y. 2018-2019) being late remittance of employees contribution to PF and ESI under the respective Acts. 4. Aggrieved, assessee preferred an appeals befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of the employees contribution to PF/ESI alleging that the payment was not made by the appellant in accordance with the provisions u/s 36[1][va] of the I.T.Act? 7.1 In deciding the above substantial question of law, the Hon'ble High Court rendered the following findings:- 20. Paragraph-38 of the PF Scheme provides for Mode of payment of contributions. As provided in sub para (1), 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom 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 Limited v. DCIT in ITA No.307/Bang/2021 (order dated 11th October, 2021) 7.3 In view of the aforesaid reasoning and the judicial pronouncements cited supra, the amendment by Finance Act, 2021 to Sec.36[1][va] and 43B of the Act will not have application to relevant assessment year, namely A.Y. 2019- 2020. Accordingly, we direct the A.O. to grant deduction in respect of employees' contribution 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. 7.1 The CIT(A) had relied on the judgment of the Hon ble Apex Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stantive. 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. negative profit. The position has been elaborately dealt with by this Court in Commissioner of Income Tax (Central), Delhi v. Harprasad Co. P. Ltd. (1975 (99) ITR 118). This Court held with reference to the charging provisions of the statute that the expression 'income' should be understood to include losses. The expression profits and gains' refers to positive income whereas losses represent 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome assessed. 10. A combined reading of the Committee's ecommendations 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 that the penalty was leviable even in a case where addition of concealed income reduces the returned loss. 11. When the word income is read to include losses as held in Harprasad's case (supra) it becomes crystal clear that even in a case where on account of addition of concealed income the returned loss stands reduced and even if the final assessed income is a loss, still penalty 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 than an ordinary prose. There is a special peculiarity in the mode of verbal communication by legislation. Legislation is not just a series of statements, such as one finds in a work of fiction/ nonfiction or even in a judgment of a court of law. There is a technique required to draft legislation as well as to understand a legislation. Former technique is known as legislative drafting and latter 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 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 conceded by the counsel for the parties. In any case, we shall refer to few judgments containing these dicta, a little later. 33. We would also like to point out, for the sake of completeness, that where a benefit is conferred by legislation, the rule against a retrospective construction is different. If legislation confers a benefit on some persons but without inflicting a corresponding detriment 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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