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TMI Blog2021 (12) TMI 1044X X X X Extracts X X X X X X X X Extracts X X X X ..... bution towards PF and ESI was involved in the case of Lumino Industries Limited and after considering the relevant provisions of the Income Tax Act as amended from time to time as well as the relevant judicial pronouncements on the issue, this Tribunal vide common order dated 17th November, 2021 passed in ITA No. 365/KOL/2021 in the case of Lumino Industries Limited vs. Assistant Commissioner of Income Tax, Circle-5(1), Kolkata has decided the same by passing a well discussed and well reasoned order as under: "8. We have heard both the parties and perused the records. We find that the assessee had remitted the payment which are in the nature of contribution of employees' share towards PF to the fund set up for the welfare of the employees within the due date of filing of return of income u/s. 139(1) of the Act. In the present case the AO have disallowed the payment made towards these funds by relying on CBDT Circular No. 22/2015 : dated 17.12.2015 and by taking note of the decision of Hon'ble Gujrat High Court in the case of M/s. Gujrat State Road Transport (supra) and ITAT (Mumbai) decision in the case of M/s. LKP Securities(supra) that the employees contribution to PF/E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lanation must be read into the main provision with effect from the time that the main provision came into force [See Shyam Sunder v. Ram Kumar, (2001) 8 SCC 24 (para 44); Brij Mohan Das Laxman Das v. CIT, (1997) 1 SCC 352, 354; CIT v. Podar Cement (P) Ltd., (1997) 5 SCC 482, 506]. But if it changes the law it is not presumed to be retrospective, irrespective of the fact that the phrases used are "it is declared" or "for the removal of doubts". 18. There was and is no ambiguity in the main provision of Section 9(1)(ii). It includes salaries in the total income of an assessee if the assessee has earned it in India. The word "earned" had been judicially defined in S.G. Pgnatale [ (1980) 124 ITR 391 (Guj)] by the High Court of Gujarat, in our view, correctly, to mean as income "arising or accruing in India". The amendment to the section by way of an Explanation in 1983 effected a change in the scope of that judicial definition so as to include with effect from 1979, "income payable for service rendered in India". 19. When the Explanation seeks to give an artificial meaning to "earned in India" and brings about a change effectively in the existing law and in addition is stated to co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arify that the activities mentioned in the said clause include the carrying out of any work in pursuance of a contract". (emphasis supplied). This amendment takes effect retrospectively from 01.04.2002. Various other amendments also take place retrospectively. The Notes on Clauses show that the legislature is fully aware of three concepts: i) prospective amendment with effect from a fixed date; ii) retrospective amendment with effect from a fixed anterior date; and iii) clarificatory amendments which are retrospective in nature." 29. In M/s. Vijay Industries (supra), decided on 1 March 2019, a three judge Bench of this Court held that the provisions of Section 80AB which were introduced by the Finance (No. 2) Act, 1980 with effect from 1 April 1981 could not be regarded as clarificatory in nature. The Court held that the provision was made with prospective effect and the amendment would not apply to assessment year 1979-1980 and 1980-1981 because the amended provision was brought on the statute book after the assessment years in question. 30. In conclusion, we therefore, hold that the amendment which was brought by Parliament to the Explanation to Section 73 by the Financ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provides an inclusive definition of the income. Sub-clause (x) to the said clause provide that income to include any sum received by the assessee from his employees as contribution to any provident fund or superannuation fund or any fund set up under the provisions of ESI Act or any other fund for the welfare of such employees." Section 36 of the Act pertains to the other deductions. Sub-section (1) of the said section provides for various deductions allowed while computing the income under the head "Profits and gains of business or profession. Clause (va) of the said sub-section provides for deduction of any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the due date. Explanation to the said clause provides that, for the purposes of this clause, "due date" to mean the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued thereunder or under an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n do not apply and deemed to never have been applied to a sum received by the assessee from any of his employees to which provisions of sub-clause (x) of clause (24) of section 2 applies. These amendments will take effect from 1st April, 2021 and will accordingly apply to the assessment year 2021-22 and subsequent assessment years. [Clauses 8 and 9]" [Emphasis given by us] 13. Therefore, taking us through the relevant clauses of Notes of Clauses of Finance Act, 2021, he pointed out to us that it is explicitly made clear that amendment will take effect from 1st April, 2021 and therefore will accordingly apply to the assessment year 2021-11and subsequent years. Therefore according to Shri Miraj Shah the amended provision of Section 43B as well as Section 36(1)(va) are not applicable in the assessment year under consideration for the present case as it is for AY 2017-18 and therefore according to him, the decision of the Hon'ble Jurisdictional Calcutta High Court is binding on this issue as held in the case of CIT vs. M/s. Vijayshree Ltd. in ITAT No. 243 of 2011 & GA No. 26607 of 2011, CIT vs. Philips Carbon Black Ltd. in GA No. 1382 of 2014 & ITAT 31 of 2014, CIT vs. M/s. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - that if the employees' contribution is not deposited by the due date prescribed under the relevant Acts and is deposited late, the employer not only pays interest on delayed payment but can incur penalties also, for which specific provisions are made in the Provident Fund Act as well as the ESI Act. Therefore, the Act permits the employer to make the deposit with some delays, subject to the aforesaid consequences. Insofar as the Income Tax Act is concerned, the assessee can get the benefit if the actual payment is made before the return is filed, as per the principle laid down by the Supreme Court in Vinay Cement - Decided in favor of assessee." [Emphasis given by us] 16. Thus it has pointed out by the Ld. A.R. that the Hon'ble High Court Division Bench had earlier held in M/s. Aimil Ltd. (supra) that the PF/ESI Act permits the employer to make deposit with some delays, subject to the consequents as per the respective PF/ESI Acts, however insofar as the Income Tax Act is concerned, the assessee can get the benefit of deduction if the actual payment is made before the return is filed as per the principle laid down by the Hon'ble Supreme Court in Vinay Cements repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amendment brought in by Finance Act, 2021 is prospective or retrospective in operation. We note that before this amendment has been inserted by Finance Bill, 2021, the Hon'ble Jurisdictional Calcutta High Court in the case of Shri Vijayshree Ltd. Ltd. (supra), M/s. Philips Carbon Black Ltd. (supra), M/s. Coal India Ltd. (supra), M/s. Akzo Nobel India Ltd. (supra) has held that the payment of employees' contribution if made by an assessee before the due date of filing of return of income u/s. 139(1) of the Act, is allowable as a deduction. We note that by Finance Act, 2021, the provision of Section 36(1)(va) as well as Section 43B has been amended to this extend by inserting the Explanation 2 whereby it is clarified that the provision of Section 43B shall not apply and shall be deemed never to have been applied for the purpose of determining the due date under this clause. For ready reference, we reproduce the Explanation-2 to Section 36(1)(va) as under: "Section 36(1)(va) Explanation-2 - For the removal of doubts, it is hereby clarified that the provisions of Section 43B shall not apply and shall be deemed never to have been applied for the purpose of determining th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision favouring assessee in the light of the Hon'ble Supreme Court decision in M/s. Vegetable Products (supra). In the light of the aforesaid decision and relying on the ratio of the Hon'ble Supreme Court in the case of Vatika Township Pvt. Ltd. (supra) and M/s. Snowtex Investment Ltd. (supra) and also taking note of the binding decision of the Hon'ble Jurisdictional Calcutta High Court on this issue before us in Shri Vijayshree Ltd. Ltd. (supra), M/s. Philips Carbon Black Ltd. (supra), M/s. Coal India Ltd. (supra), M/s. Akzo Nobel India Ltd. (supra), we set aside the impugned order of Ld. CIT(A) and direct the AO to allow the claim of deduction in respect of employees contribution shares towards ESI, PF, by the assessee before the due date of filing of return u/s. 139(1) of the Act. Therefore the appeal of assessee succeeds and so, it is allowed in favour of assessee". 3. As the issue involved in the present appeal as well as the material facts relevant thereto are similar to the case of Lumino Industries Limited (supra), I respectfully follow the decision rendered by the Tribunal in the said case and delete the disallowance made by the Assessing Officer and confirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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