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TMI Blog2021 (2) TMI 1270X X X X Extracts X X X X X X X X Extracts X X X X ..... ;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 under dispute and where such contribution has been deposited before the due date of filing of the return of income, no disallowance u/s. 36(1)(va) of the Act can be made. In support, reliance was placed on decision of the Hon'ble Rajasthan High Court in the case of CIT Vs. Rajasthan State Beverages Corporation Ltd. (2017) 392 ITR 2, against which SLP filed by the Revenue has been dismissed by the Hon'ble Supreme Court, as reported in PCIT Vs. Rajasthan State Beverages Corporation Ltd. (2017) 250 Taxman 16. It was further submitted that similar view has been taken by the Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Sect/on 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 check on the said claims/deductions having been made, the said provision was brought in to curb the said activities and which was approved by the Hon'ble Apex Court in the case of Allied Motors (P) Ltd. (supra). 21. A conjoint reading of the proviso to Section 43-B which was inserted by the Finance Act, 1987 made effective from 01/04/1988, the words numbered as clause (a), (c), (d), (e) and (f), are omitted from the above proviso and, furthermore second proviso was removed by Finance Act, 2003 therefore, the deduction towards the employer's contribution, if paid, prior to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. CIT(A) ought to have considered and followed the decision of the jurisdictional Rajasthan High Court, as evident from series of decisions referred supra, as the same is binding on all the appellate authorities as well as the Assessing officer under its jurisdiction in the State of Rajasthan. 18. In light of aforesaid discussion and in the entirety of facts and circumstances of the case, the addition by way of adjustment while processing the return of income u/s. 143(1) amounting to Rs. 4,38,530/- so made by the CPC towards the delayed deposit of the employees's contribution tow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct 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 way of adjustment while processing the return of income u/s. 143(1) amounting to Rs. 6,28,972/- so made by the CPC towards the deposit of the employees's contribution towards ESI and PF though paid before the due date of filing of return of income u/s. 139(1) of the Act is hereby directed to be deleted." 6. It was further submitted that similar view has been taken by the Chandigarh Benches of the Tribunal in number of cases and our reference was drawn to the decision in the case of M/s. Czars Faucets Limited Vs. CPC in ITA No. 255/Chd/2021 dated 02.11.2021 wherein the relevant fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee 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, 2021 wherein Explanation to section 36(1)(va) of the Act has been introduced. It was submitted that from the reading of the said amendment it is evident that the law is and has always been very clear that employees' contribution to specified fund will not be allowed as deduction u/s. 36(1)(va) of the Act if there is delay in deposit even by a single day as per the due dates specified in the respective Statutes. It was further submitted that the said amendment is only declaratory/clarificatory in nature and, is, therefore, applicable with retrospective effect by necessary intendment of d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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