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TMI Blog2022 (2) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... ssae 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 - Decided in favour of assessee. - ITA No.561/Bang/2021 - - - Dated:- 3-2-2022 - Shri George George K, JM And Ms.Padmavathy S, AM For the Appellant : Sri.Raghavendra Maya, CA For the Respondent : Smt.Priyadarshini Besaganni, JCIT-DR ORDER PER PADMAVATHY S, AM : This appeal at the instance of the assessee is directed against the CIT(A) s order dated 27.08.2021. The relevant assessment year is 2019-2020. 2. The grounds raised read as follows:- 1. It is submitted, its well settled in law that that section 43B of Income Tax Act'1961 supersedes over section 36(1)(va) of the said Act. Further the word payable is not defined anywhere in the Act. It is as per the binding policy of the accounting principle that any unpaid amount recorded at the end of year in balance sheet would be considered payable. Thus there should be no confusion about the word used in section 43B(b) any sum payable by the assessee as an employer by way of contribution to any provident fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and denying Assessee I s claim of deduction of employees contribution to PF/ESI alleging that the payment was not made by appellant in accordance with the provisions of Section 36(1)(va) of Act 1961. The Appellant counsel relied on earlier judgment of ours in CIT v. Spectrum Consultants (P.) Ltd. [2014] 49 taxmann.com 29/227 Taxman 164 (Mag.) whereas for Revenue attempted to pursue to take a different view following decision of Gujrat High Court. Gujarat State Road Transport Corpn (Supra). But, if the contribution of employees fund is deposited within due date the Assessee is straightaway entitled for deduction under Section 36(1)(va). However Section 43B provides for certain deductions allowable only on actual payment. It gives an extension to the employer to make payment of contribution to provident fund or any other fund, till due date applicable for furnishing of Return under Section 139(1) of Act 1961, in respect of previous year in which liability to pay such sum was incurred, and evidence of such payment is furnished by Assessee along with such Return. Court then said: In short, this provision states, notwithstanding anything contained in any other provision co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the board in the notification it would be using the artificial intelligence and data analytic for the smooth functioning of NFAC, in our view this should be used in all aspects. Further we expect the Board to take appropriate remedial measures at the earliest forrecalling such kind of orders, by issuing comprehensive guidelines for NFAC and give relief to the honest assessee. 38. In the light of the above said discussion, Judgments of SC and HCs, We hold that NFAC, is bound by the binding decision of the Jurisdictional Allahabad High Court, as the assessing officer is situated, within the territorial and subjective jurisdiction of High court. Hence, we allow the appeal of the assessee by respectfully following the decision of jurisdictional High Court ..... (emphasis applied) 6. It is further submitted that, the appeal was rejected on the sole ground that these jurisprudence were not applicable since the Finance Act 2021 has amended section 36 (l)(va), by insertion of explanation -2 and for section 43(b) by insertion of explanation-5 to the existing provisions of law. Whereas these amendments were prospective in nature and can not be applied retrospectively. The said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respective Acts. The assessee filed a rectification application u/s 154 of the I.T.Act to CPC. The CPC rejected the rectification application vide order dated 06.03.2020. 4. Aggrieved by the order of CPC rejecting the rectification application, the assessee preferred an appeal before the first appellate authority. It was stated that the assessee had paid the employees contribution to PF and ESI prior to the due date of filing of the return u/s 139(1) of the I.T.Act. Therefore, it was submitted that the assessee is entitled to deduction of employees contribution to PF and ESI having regard to the provisions of section 43B of the I.T.Act. In this context, the assessee relied on the judgment of the Hon ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd Vs. DCIT, reported in 366 ITR 408 (Kar.). The CIT(A), however, rejected the appeal of the assessee. The CIT(A) held that the issue involved in the appeal is debatable and hence appeal cannot be entertained from an order u/s 154 of the I.T.Act. It was further held that the amendment to section 36(1)(va) and 43B of the I.T.Act by Finance Act, 2021 is clarificatory and has got retrospective operation. 5. Aggrieved ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered 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 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 tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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