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TMI Blog2022 (3) TMI 1310X X X X Extracts X X X X X X X X Extracts X X X X ..... /12/2021 5. ITA No. 26/JP/2022 Jairaj ITBA/NFAC/S/250/2021-22/1037786855(1) 14/12/2021 6. ITA No. 28/JP/2022 The Earth House Resorts LLP ITBA/NFAC/S/250/2021-22/103720000(1) 24/11/2021 2. Since the issues involved are common in all the above appeals and the appeals were heard together, therefore, these are being disposed off by this common order for the sake of convenience and brevity. 3. As a lead case, for deciding the appeals, we take ITA No. 18/JP/2022 for the A.Y. 2018-19 wherein following grounds have been raised by the assessee. "1. In the facts and circumstances of the case and in law, ld. CIT(A), has erred in confirming the action of the ld. AO, in making adjustments in the intimation under Section 143(1) which are outside the purview of Section 143(1)(a). The action of the ld. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the entire disallowance of Rs. 5,61,32,750/-. 2. In the facts and circumstances of the case and in law, ld. CIT(A), has erred in confirming the action of the ld. AO, in making disallowance of Rs. 5,61,32,750/- in respect of ESIC and PF u/s 36(1)(va) of Income Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r before the return of income under sub-section (1) of Section 139 of the IT Act. 23. Thus, we are of the view that where the PF and/or EPF, 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" * CIT vs.Jaipur Vidyut Vitran Nigam Ltd. [2014] 49 taxmann.com 540 ( Rajasthan) [PB 34-35] "6. In our view no substantial question of law arises out of the orders of the Tribunal as it is an admitted fact that the entire amount was deposited by the respondent-assessee at least on or before the due date of filing of the returns under s. 139 of the IT Act and being a concurrent finding of fact by the respective authorities and in the light of the judgments rendered by this Court in the case of CIT v. State Bank of Bikaner & Jaipur/ Jaipur Vidyut Vitran Nigam Ltd. [2014] 363 ITR 70/43 taxmann.com 411 of even date wherein it has been held that if the amount has been deposited on or before the due date of filing the return under s. 139 and admittedly it was deposited on or before the due date then the amount cannot be disallowed under s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - within the "due date" prescribed as per Explanation 2 Section 36(1)(va) and that by virtue of deeming provision of Section 2(24)(x) r.w.s 36(1)(va) of the Act, deduction was not admissible to the appellant for Rs. 5,61,32,750/- based on the ROI and the information contained therein. Hence, the AO rightly invoked provisions of S.143(1)(a)(ii) of the Act and made the adjustment for such incorrect claim made by the appellant. He also observed that the decision of Hon'ble Kolkata High Court in the case of Mintri Tea Co. is of no help as the facts of the current case indicate inadmissible deduction on the face of ROI and the information accompanying it. Moreover, the decision of Mintri Tea Co.was in the context of AY prior to AY 2008-09 and that the provisions of S.143(1) underwent substantial change w.e.f 01.04.2008. 9. Aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us. The Ld. AR for the assessee at the time of hearing submitted that the payment to employee's contribution towards PF and ESI was made before the date of filing the return of income by the assessee U/s 139(1) of the Act. The ld. Counsel for the assessee apart from that relied on the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder explaining the provisions of the Act. 13. We have considered the rival contention and perused the orders of the authorities and the material available on record. Admitted facts of the present case are that the payments of PF & ESI contribution relating employee's contribution are before the due date of filing of return of income U/s 139(1) of the Act. We have noted that the issue under consideration is covered by the decision of the Coordinate Bench in case of M/s Mohanlal Khatri vs. ACIT in ITA No. 144/JP/2021 order dated 29.11.2021 (Supra) wherein it is held as under:- "7. I have considered the submissions of both the parties and perused the material available on record. In the present cases, it is noticed that an identical issue having similar facts has already been adjudicated by the ITAT, Jodhpur Bench in the aforesaid referred to cases, wherein one of us is author of the order dated 27/09/2021. In the said order it has been held vide paras 7 to 11 in ITA No. 59/Jodh/2021 for the assessment years 2015-16 in the case of Mohangarh Engineers and Construction Company Vs. DCIT and in the case of Bikaner Ceramics Private Limited, Bikaner Vs. ADIT, CPC, Bangaluru, in ITA No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified. Being dissatisfied, the Revenue has come up with the present appeal. After hearing Mr. Sinha, learned advocate, appearing on behalf of the appellant and after going through the decision of the Supreme Court in the case of Commissioner of Income Tax vs. Alom Extrusion Ltd., we find that the Supreme Court in the aforesaid case has held that the amendment to the second proviso to the Sec 43(B) of the Income Tax Act, as introduced by Finance Act, 2003, was curative in nature and is required to be applied retrospectively with effect from 1st April, 1988. Such being the position, the deletion of the amount paid by the Employees' Contribution beyond due date was deductible by invoking the aforesaid amended provisions of Section 43(B) of the Act. We, therefore, find that no substantial question of law is involved in this appeal and consequently, we dismiss this appeal. Urgent xerox certified copy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities." In the light of the aforesaid discussion we do not accept the Ld. CIT(A)'s stand denying the claim of assessee since assessee delayed the employees contribution of EPF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its return of income, it is noted that the assessee has deposited the employees's contribution towards ESI and PF well before the due date of filing of return of income u/s 139(1) and the last of such deposits were made on 16.04.2019 whereas due date of filing the return for the impugned assessment year 2019- 20 was 31.10.2019 and the return of income was also filed on the said date. Admittedly and undisputedly, the employees's contribution to ESI and PF which have been collected by the assessee from its employees have thus been deposited well before the due date of filing of return of income u/s 139(1) of the Act. 14. The issue is no more res integra in light of series of decisions rendered by the Hon'ble Rajasthan High Court starting from CIT vs. State Bank of Bikaner & 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 dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved that till this provision was brought in as the due amounts on one pretext or the other were not being deposited by the assessees though substantial benefits had been obtained by them in the shape of the amount having been claimed as a deduction but the said amounts were not deposited. It is pertinent to note that the respective Act such as PF etc. also provides that the amounts can be paid later on subject to payment of interest and other consequences and to get benefit under the Income Tax Act, an assessee ought to have actually deposited the entire amount as also to adduce evidence regarding such deposit on or before the return of income under sub-section (1) of Section 139 of the IT Act. 23. Thus, we are of the view that where the PF and/or EPF, 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 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ikaner Ceramics Private Limited, Bikaner Vs. ADIT, CPC, Bangaluru (supra). So respectfully following the aforesaid referred to order, the disallowances sustained by the Ld. CIT(A) are deleted." 14. A similar issue has been decided by the Hon'ble Delhi High Court in the case of CIT vs. AIMIL Ltd., (2010) 321 ITR 508 wherein it has been held as under:- "The deletion with effect from April 1, 2004 by the Finance Act, 2003 of the second proviso to section 43B of the Income-tax Act, 1961, which stipulates that contributions to the provided fund and Employees State Insurance Fund should be made within the time mentioned in section 36(1)(va), that is, the time allowed under the Employees' Provident Fund and Miscellaneous Provisions Act, 1952, as well as the Employees' State Insurance Act, 1948, it treated as retrospective in nature. If the employees' contribution is not deposited thereafter, the employer not only pays interest and delayed payment but can incur penalties also, for which specific provisions are made in the those Acts. In so far as Income-tax Act, 1961, is concerned, the assessee can get the benefit of deduction of the payments, if the actual payment is made before the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 there-under or under any standing order, award, contract of service or otherwise. Section 43B specifies the list of deductions that are admissible under the Act only upon their actual payment. Employer's contribution is covered in clause (b) of section 43B. According to it, if any sum towards employer's contribution to any provident fund or superannuatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt appeal is filed by the assessee against disallowance of Rs. 5,61,32,750/- pertaining to employees contribution made towards ESI & PF which was paid by the appellant company after the "due date" under respective statute of ESIC/PF. This disallowance was made by the AO under section 143(1) of the Act on the basis of remarks in the relevant column of Form no. 3CD report attached with the return of income. In the appeal petition, the appellant has stated that total income returned at Rs. 24,87,27,450/- has been processed at Rs. 30,48,60,200/- after making adjustment u/s. 143(1)(a)(ii) for Rs. 5,61,32,750/- by disallowing PF and other contribution paid after due date prescribed by respective labour laws, out of sum collected from employees contribution to PF/ESIC etc. The assessee has stated that disallowance of Rs. 5,61,32,750/- was not in accordance with the provision of Section 43B of the Act as the said amount were duly remitted before the due date of filling of return of income. The appellant has referred to the decisions of various High Courts including the decision of jurisdictional Rajasthan High Court in the case of Rajasthan State Beverages Corporation Ltd 392 ITR 2 and sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 003, even the employers contribution as per clause (b) of section 43B was to be allowed only if the payments were made within the "due date" as specified in the explanation below section 36(1)(va) of the Act. It was in the context of this amendment that the Hon'ble Gauhati High Court has held that the said second proviso could be considered to be never in existence and accordingly the decision in favour of appellant was given for the issues pertaining to deduction u/s 43B(b) i.e. employers contribution. As the Hon'ble Supreme Court dismissed the SLP of the Revenue, the decision of the Hon'ble Gauhati High Court got approved by the Hon'ble Apex Court pertaining to only employers contribution as contemplated by section 43B(b) of the Act. The last para of decision of Hon'ble Delhi high Court in the case of M/s AIM IL Ltd. is reproduced hereunder: "17. We may only add 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied for the purposes of determining the "due date" under this clause. The above explanation sets to rest the controversy pertaining to allowability of deduction in respect of employees' contribution to PF/ESIC under section 43B of the Act. The Explanation 2 inserted by Finance Act, 2021 emphasizes that section 43B was never deemed to have applied for the purposes of due dates as under section 36(1)(va) of the Act. On the issue of clarificatory amendments, the Honble Supreme Court had occasion to analyse the issue in detail in the case of CIT vs Goldcoin Helath Foods Pvt Ltd 304 ITR 308 92008) and it was held that if a statute is curative or merely declaratory of the previous law, retrospective operation is generally intended by the legislature. In the same decision the Hon'ble Bench refer to the principles of statutory interpretation by justice G.P. Singh wherein the language "shall be deemed always to have meant" or "shall be deemed never to have included" was found as declaratory and in plain terms, retrospective. In the current case of appellant, reliance was placed on the decision of Honble Rajasthan High Court in the case of Rajasthan Beverages Corporation Ltd 392 I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not backward. In the case of Vatika Township Pvt. Ltd., (Supra), the issue under challenge before Hon'ble Supreme Court was the insertion of proviso to section 113 of the Act by the Finance Act 2002 for charging of surcharge. Hon'ble Supreme Court noted that though provision for surcharge under the Finance Acts have been in existence since 1995, the charge of surcharge with respect to block assessments, having been created for the first time by the insertion of proviso to Section 113 of the Act, by Finance Act, 2002, it is clearly a substantive provision and is to be construed as prospective in operation. The Hon'ble Supreme Court held that the amendment neither purports to be merely clarificatory nor is there any material to suggest that it was intended by parliament. The Hon'ble Supreme Court finally held that the proviso to Section113 of the Act is prospective and not retrospective. For this proposition their lordships of the Hon'ble Supreme Court observed at page 495 as under:- "Notes on Clauses" appended to Finance Bill, 2002 while proposing insertion of proviso categorically states that "this amendment will take effect from 1st June, 2002". These become epigraphic words, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to Section 158BB is stated to be clarificatory in nature. Likewise, it is mentioned that amendments in Section 145 whereby provisions of that section are made applicable to block assessments is made clarificatory and would take effect retrospectively from 1st day of July, 1995. When it comes to amendment to Section 113 of the Act, this very circular provides that the said amendment along with amendments in Section 158BE, would be prospective i.e. it will take effect from 1st June, 2002. (f) Finance Act, 2003, again makes the position clear that surcharge in respect of block assessment of undisclosed income was made prospective. Such a stipulation is contained in second proviso to subsection (3) of Section 2 of Finance Act, 2003. This proviso reads as under: "Provided further that the amount of income-tax computed in accordance with the provisions of section 113 shall be increased by a surcharge for purposes of the Union as provided in Paragraph A, B, C, D or E, as the case may be, of Part III of the First Schedule of the Finance Act of the year in which the search is initiated under section 132 or requisition is made under section 132A of the income-tax Act." Addition of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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