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TMI Blog2022 (2) TMI 870X X X X Extracts X X X X X X X X Extracts X X X X ..... ussion, the case of the assessee in ITA No. 392/Chd/2021 is taken as the lead case. ITA No. 392/Chd/2021 (A.Y. 2017-18) 3. Briefly, the facts of the case are that the assessee filed its return of income on 27.11.2017 declaring total income of Rs. 70,44,062/- which was processed u/s. 143(1) of the Act and in terms of intimation u/s. 143(1) dated 27.12.2018 issued by CPC, it made disallowance of Rs. 7,49,608/- towards employees' contribution towards ESI and PF. 4. On appeal, the Ld. CIT(A), NFAC has confirmed the disallowance made u/s. 143(1) of the Act on account of assessee's failure to pay the employees' contribution of ESI & PF within the prescribed due date under the relevant Statute as per section 36(1)(va) of the Act. Against the said order, the assessee has now come in appeal before us. 5. During the course of hearing, the Ld. AR submitted that the assessee has deposited employees' contribution towards ESI and PF though with the delay of few days from the due date mentioned in the respective Statutes, however, the same was deposited well before the due date of filing of return of income u/s. 139(1) of the Act. It was submitted that the said fact is not und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... & Jaipur (supra) and subsequent decisions. 15. In this regard, we may refer to the initial decision of Hon'ble Rajasthan High Court in case of CIT vs. State Bank of Bikaner & Jaipur wherein the Hon'ble High Court after extensively examining the matter and considering the various decisions of the Hon'ble Supreme Court and various other High Courts has decided the matter in favour of the assessee. In the said decision, the Hon'ble High Court was pleased to held as under: "20. On perusal of Sec. 36(1)(va) and Sec. 43(B)(b) and analyzing the judgments rendered, in our view as well, it is clear that the legislature brought in the statute Section 43(B)(b) to curb the activities of such tax payers who did not discharge their statutory liability of payment of dues, as aforesaid; and rightly so as on the one hand claim was being made under Section 36 for allowing the deduction of GPF, CPF, ESI etc. as per the system followed by the assessees in claiming the deduct/on i.e. accrual basis and the same was being allowed, as the liability did exist but the said amount though claimed as a deduction was not being deposited even after lapse of several years. Therefore, to put a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , CPF, GPF etc., if paid after the due date under respective Act but before filing of the return of income under Section 139(1), cannot be disallowed under Section 43B or under Section 36(1)(va) of the IT Act." 16. The said decision has subsequently been followed in CIT vs. Jaipur Vidyut Vitran Nigam Ltd., (supra), CIT vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. (supra), and CIT vs. Rajasthan State Beverages Corporation Limited (supra). In all these decisions, it has been consistently held that where the PF and ESI dues are paid after the due date under the respective statues but before filing of the return of income under section 139(1), the same cannot be disallowed under section 43B read with section 36(1)(va) of the Act. 17. We further note that though the Ld. CIT(A) has not disputed the various decisions of Hon'ble Rajasthan High Court but has decided to follow the decisions rendered by the Hon'ble Delhi, Madras, Gujarat and Kerala High Courts. Given the divergent views taken by the various High Courts and In the instant case, the fact that the jurisdiction over the Assessing officer lies with the Hon'ble Rajasthan High Court, in our considered view, the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of the Hon'ble Karnataka High Court. The next aspect to be considered is whether the amendment to the provisions to section 43B and 36(1)(va) of the Act by the Finance Act, 2021, has to be construed as retrospective and applicable for the period prior to 01.04.2021 also. On this aspect, we find that the explanatory memorandum to the Finance Act, 2021 proposing amendment in section 36(1)(va) as well as section 43B is applicable only from 01.04.2021. These provisions impose a liability on an assessee and therefore cannot be construed as applicable with retrospective effect unless the legislature specifically says so. In the decisions referred to by us in the earlier paragraph of this order on identical issue the tribunal has taken a view that the aforesaid amendment is applicable only prospectively i.e., from 1.4.2021. We are therefore of the view that the impugned additions made under section 36(1)(va) of the Act in both the Assessment Years deserves to be deleted." 7. In light of the aforesaid discussions and in the entirety of facts and circumstances of the case and following the consistent decisions taken by the various Benches of the Tribunal, the addition by wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the additions cannot be made or sustained on the strength of the amendment effected by Finance Act, 2021 to Sections 36(1)(va)/43B of the Act as the legal position thereon is very clear. The departmental stand that it is clarificatory in nature has consistently been rejected. Thus, in the face of the clear legal position, as set out hereinabove, we find that the claim of the assessee is to be allowed in the year under consideration which is 2018-19 assessment year. The impugned order, accordingly, is set aside and the AO is directed to delete the disallowance. The appeal of the assessee is allowed. Said order was pronounced in the presence of the parties via Webex." 7. It was further submitted that similar view has been taken by the Calcutta Benches of the Tribunal in case of AKS Power Equipments (P) Ltd. & others Vs. DCIT (CPC) in ITA No. 244/kol/2021 & others dated 1.09.2021 and Delhi Benches of the Tribunal in case of M/s. Adama Solutions (P) Ltd. Vs. ADIT, CPC in ITA No. 1800/Del/2020 dated 13.10.2021. It was accordingly submitted that disallowance so made may be directed to be deleted. 8. Per contra, the Ld. DR relied upon the amendment brought in by the Finance Act, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years and the impugned assessment year being assessment year 2017-18, the said amendment cannot be applied in the instant case. Therefore, considering the entirety of facts and circumstances of the case and following the decisions of various High Courts as well as Coordinate Benches of the Tribunal referred above, the addition made by way of adjustment while processing the return of income u/s. 143(1) of the Act, amounting to Rs. 7,49,608/- so made by the CPC towards the deposit of employees' contribution towards ESI and PF paid before the due date of filing of the return of income u/s. 139(1) of the Act, is hereby directed to be deleted. 10. The appeal of the assessee is accordingly allowed. ITA No. 393/Chd/2021 (A.Y. 2018-19) 11. In this appeal, both the parties fairly submitted that the facts and circumstances of these cases are exactly identical and similar contentions as raised in ITA No. 392/Chd/2021 may be considered. Therefore, our findings and directions contained in ITA No. 392/Chd/2021 shall apply mutatis mutandis in the instant case and the appeal of the assessee is allowed. ITA No. 116/Chd/2021 (A.Y. 2019-20) 12. In this appeal, we have gone through records as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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