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TMI Blog2021 (12) TMI 1282X X X X Extracts X X X X X X X X Extracts X X X X ..... udicial Member For the Appellant : Akkal Dushwewala, FCA For the Respondents : Ranu Biswas, Addl. CIT ORDER Per Shri A.T. Varkey, JM These appeals preferred by the assessee against the orders of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [hereinafter referred to as 'CIT(A)'] dated 10.08.2021 for the AYs: 2014-15, and, order dated 31.07.2021 for the AYs 2017-18 2019-20. 2. At the outset, the Ld. AR of the assessee pointed out that the only issue in all these appeals that are in dispute before this Tribunal is against the action of the Ld. CIT(A) confirming disallowance of employees' contribution made to the respective funds of the Government under PF ESI Act. According to the authorities below, since the assessee has not remitted the employees' contribution on the due date as prescribed by the PF ESI Act, the contribution made belatedly cannot be allowed. However, according to the assessee since the assessee has undisputedly made the remittance in respect of employees' contribution of PF as well as ESI before filing of the return of income u/s. 139 of the Act, no disallowance is warranted. According to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return of income. And the AO cited the CBDT Circular No. 22/2015 : dated 17.12.2015 for disallowing ₹ 10,946/- which was added back to the total income of the assessee. 6. Aggrieved the assessee preferred an appeal before the Ld. CIT(A) who confirmed the appeal by holding as under: 5.c) Findings:- The addition in this case involves a disallowance on account of delayed payment in respect of Employees' contribution to EPF as per the provisions of Section 36(1)(va) of the Act. The appellant has stated that the same should have been allowed as the payments were made before the due date of the filing of the ITR. The appellant has quoted a number of judgments in his favour. However it is seen that the Hon'ble Gujrat High Court in CIT vs. Gujarat State Road Transport Corporation (2014) 366 ITR 170 (Guj) and the Hon'ble Kerala High Court in CIT vs. Merchant (2015) 280 CTR 381(Ker) have clearly held that the scope of section 43B and Section 36(1)(va) are different and thus, there is no question of reading both the provisions together to consider whether the assessee is entitled to deduction in respect of the sum belated by paid towards such contribution, es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch action of Ld. CIT(A) has been challenged before us. 9. Assailing the action of Ld. CIT(A) the Ld. A.R. Shri Miraj D Shah submitted that the amendment brought in by the Finance Act 2021 is prospective in nature and for buttressing this submission he drew our attention to the decision of Hon'ble Supreme Court in the case of M/s. M.M. Aqua Technologies Ltd. vs. CIT, Delhi and drew our attention to Para 22 wherein the Hon'ble Supreme Court has held that if the retrospectivity of a taxing statute is urged due to the expression used in the Statute is for the removal of doubts cannot be presumed to be retrospective, if it alters or changes the law as it earlier stood and has relied on several decisions of the Hon'ble Supreme Court which reads as under: 22. Second a retrospective provision in a tax act which is 'for the removal of doubts' cannot be presumed to be retrospective, even where such language is used, if it alters or changes the law as it earlier stood. This was stated in Sedco Forex International Drill. Inc. vs. CIT (2005) 12 SCC 717 as follows: 17. As was affirmed by this Court in Goslino Mario [ (2000) 10 SCC 165] a cardinal principle o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CC 613 at paras 60 to 70 per Kapadia, C.J. and para 333, 334 per Radhakrishnan, J. 10. And according to Ld. A.R. the Ld. CIT(A) erred in holding the later amendment brought in by Finance Act, 2021 to be retrospective and for that proposition he cited the Constitution Bench decision of the Hon'ble Supreme Court in the case of CIT vs. Vatika Township Pvt. Ltd. 2015 (1) SCC 1 which decision has been taken note of by the Hon'ble Supreme Court in the case of M/s. Snowtex Investment Ltd. vs. PCIT dated 30.04.2019 [Civil Appeal No(s). 4483 of 2019, Special Leave to appeal (c) No. 20017/2017] wherein the Hon'ble Supreme Court has explained the test to be applied to find out whether the intent of the legislature/Parliament is to give retrospective operation of law by taking note of the decision in the case of Vatika Township (supra) and held as under: The Test to be applied is essentially one of the intent of the legislature. 28. In a more recent decision in Commissioner of Income Tax vs. Vatika Township Pvt. Ltd. (2015) 1 SCC 1, a Constitution Bench of this Court held thus: 42.1. Notes on Clauses appended to the Finance Bill, 2002 while proposing insertio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2009, the loss which occurred to the assessee as a result of its activity of trading in shares (a loss arising from the business of speculation) was not capable of being set off against the profits which it had earned against the business of futures and options since the latter did not constitute profits and gains of a speculative business. (Emhasis given by us) 11. Citing the aforesaid case law, Shri Miraj D Shah contended that in order to find out the legislative intent as to whether the Parliament/legislature intended the amendment/explanation brought in later to be retrospective in operation or not, then one may take the assistance of Notes on Clauses which are appended to the Finance Bill concerned. Shri Miraj Shah drawing our attention to the Constitution Bench decision of Hon'ble Supreme Court in Vatika Township Ltd. (supra) pointed out that Parliament/Legislature is aware of the three concepts before an amendment is brought in, which can be discerned from reading of the Notes on Clauses to the Bill which are (i) prospective amendment with effect from a fixed date; (ii) retrospective amendment with effect from a fixed anterior date; and (iii) clarificatory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on under section 43B and such deduction would be admissible for the accounting year. This provision does not cover employee contribution referred to in clause (va) of sub-section (1) of section 36 of the Act.. Though section 43B of the Act covers only employer's contribution and does not cover employee contribution, some courts have applied the provision of section 43B on employee contribution as well. There is a distinction between contribution and employee's contribution towards welfare fund. It may be noted that employee's contribution towards welfare funds is a mechanism to ensure the compliance by the employers of the labour welfare laws. Hence, it needs to be stressed that the employer's contribution towards welfare funds such as ESI and PF needs to be clearly distinguished from the employee's contribution towards welfare funds. Employee's contribution is employee own money and the employer deposits this contribution on behalf of the employee in fiduciary capacity. By late deposit of employee contribution, the employers get unjustly enriched by keeping the money belonging to the employees. Clause (va) of sub-section (1) of Section 36 of the Act wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. Per contra, the Ld. D.R. Shri Jayanta Khanra supporting the decision of authorities below has contended that the Hon'ble Delhi High Court in the case of CIT vs. Bharat Hotel Ltd. in 410 ITR 417 has decided this issue in favour of the revenue and the Delhi Tribunal has followed the order of the Hon'ble Delhi High Court in Bharat Hotel (supra) and upheld the action of the Department disallowing the amount deposited by the assessee company in respect of the employees' contribution since it was not deposited within the due date as prescribed by PF Fund and ESI Act. So therefore the Ld. D.R. does not want us to interfere in the impugned order passed by the authorities below. 15. In his rejoinder, the Ld. A.R. Shri Miraj D Shah contended that even though the Delhi High Court in the case of Bharat Hotels Ltd. (supra) had held in favor of the revenue, however the Hon'ble High Court in that case (Bharat Hotels Ltd.) had not considered the earlier Division Bench judgment of the Delhi High Court which was binding on a Division Bench in the case of CIT vs. Aimil Ltd. Ors. Reported in 321 ITR 508 (Delhi) wherein the head notes reads as under: Late deposit of PF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue either wise. However, when it comes to fiscal statutes, according to Shri Miraj D Shah, in such circumstance [i.e., conflict of decisions/views of Benches of same strength and when there is no decision on the issue of jurisdictional High Court] then, the decision in favour of assessee should be followed as held by the Hon'ble Supreme Court in the Vegetable Products Ltd. 82 ITR 192 (SC) wherein it is settled when two views/interpretations are possible on an issue, then the view which is in favour of the assessee need to be followed. Taking note of this aspect, it was brought to our notice that the latest Delhi Tribunal order and Hyderabad Tribunal Orders have held in favour of the assessee in NCC Ltd. vs. ACIT dated 27.09.2021 and also Hyderabad Bench decision in ACIT vs. Nava Bharat Ventures Ltd. (2021) 10 TMI 403 wherein Tribunal was pleased to direct deletion of the disallowance made by the AO in respect of the payment of employees contribution to ESI/PF. Therefore he prayed that the disallowance made by authorities below be deleted on this score. 17. Have heard both the parties. We note that the Finance Bill, 2021 has brought in an amendment which disallows the em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. Vatika Township Ltd. and held that the intent of the Parliament/legislature need to be looked into for ascertaining whether the amendment should be retrospective or not. In Vatika Township Ltd. (supra) the Hon'ble Supreme Court held that the notes on clauses appended to the Finance Bill will throw light as to the legislative intent; because it has to be borne in mind that Parliament/legislature is aware of three concepts before an amendment is brought in, which can be discerned from reading of the Notes on Clauses to the Bill which are (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. So when we adjudicate whether the view of Ld. CIT(A) that the explanation 2 brought in by Finance Act, 2021 is retrospective, let us look at the Notes on Clauses and the relevant clauses 8 9 of the Finance Bill, 2021 (supra) pertaining to the issue in hand which in clear and unambiguous terms spells out the intention of Parliament that the amendment shall take effect from 1st April, 2021 and therefore will accordingly apply to Assessment Year 20 ..... 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