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TMI Blog2022 (3) TMI 1344X X X X Extracts X X X X X X X X Extracts X X X X ..... year under consideration i.e. 2018-19 but will apply from assessment year 2021-22 and subsequent assessment years. Hence, this issue raised in assessee s appeal is allowed. - ITA. No. 284/JP/2021 - - - Dated:- 29-3-2022 - Dr. S. Seethalakshmi, JM And Shri Rathod Kamlesh Jayantbhai, AM For the Assessee : Shri Rahish Mohammed (C.A.) For the Revenue : Smt. Runi Pal (Addl.CIT) ORDER PER: DR. S. SEETHALAKSHMI, J.M. The appeal is filed by the assessee arising out of order of ld. CIT(A) in ITBA/NFAC/S/250/2021-22/1035419012(1) vide order dated 09.09.2021 for the assessment year 2018-19. 2. The assessee has raised the following grounds:- 1. That on the facts and in the circumstances of the case, the ld. CIT(A), NFAC, Delhi has grossly erred in the violating the principal of faceless appeal as announced for justice of honest taxpayers and the functioning of faceless processing s in honesty and judicially manner and to avoid litigation as created unnecessary by the AO. 2. That on the facts and in the circumstances of the case, the ld. CIT(A), NFAC, Delhi has grossly erred in confirming the additions made by the ld. DCIT, CPC on account of disallowi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of CIT vs. State Bank of Bikaner Jaipur reported in (2014) 363 ITR 70 Rajasthan. 2. CIT vs. Jaipur Vidhyut Vitran Nigam Limited reported in (2014) 363 ITR 307 Rajasthan. 3. CIT vs. Udaipur Dugdh Utpadak Sahkari Sangh Limited reported in 2014 366 ITR 163 Rajasthan. 4. Judgment of Hon ble Punjab Haryana High Court in the case of CIT vs. Hemla Embroidery Mills (P.) Ltd. [2014] 366 ITR 167 (P.H.). 5. Karnataka High Court : February 4, 2014 [2014] 366 ITR 408 (Kar.) M/s Essae Teraoka Pvt. Ltd vs. DCIT 6. Karnataka High Court : [2008] 298 ITR 141 (Karn) July 3,2007 Commissioner of Income Tax vs. Sabari Enterprises 7. Calcutta High Court: August 8, 2018 Peerless General Finance and Investment Co. vs. Commissioner of Income Tax, Kolkata-41 8. Rajasthan High Court: August4,2016 Commissioner of Income Tax, Jaipur-2 vs. M/s Rajasthan State Beverages Corpn. Ltd. 9. Bombay High Court: [2014] 368 ITR 749 (Bom) October 14, 2014 The Commissioner of Income Tax vs. Ghatge Patil Transport Ltd. 10. Delhi High Court [2010] 321 ITR 508 (Delhi) December 23,2009 Commissioner of Income Tax vs. Aimil Limited, Nirmala Swami Spearhead Digital Studio, M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and has also referred to the rationale of the amendment as explained by the memorandum in the Finance Bill, 2021. 7. The ld. CIT(A) finally held that the adjustment made by the AO will fall in the category of S.143(1)(a)(ii) of the Act as it was an incorrect claim of deduction u/s 36(1)(va) of the Act. The ld. CIT(A) observed that it is not in dispute that appellant's ROI itself shown the delay in payments of Employee s contribution to PF/ESIC amounting to ₹ 86,905/- 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 assessee for ₹ 86,905/- 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 assessee. 8. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. 60/Jodh/2021 for the A.Y. 2019-20 as under:- 7. We have considered the submission of both the parties and perused the material available on record. 8. In the present cases, it is not in dispute that the assessees deposited the contribution of PF ESI belated in terms of section 36(1)(va) of the Act, however, the said deposits were made prior to filing of return of income u/s 139(1) of the Act. 8.1 Identical issue with the similar facts have already been adjudicated by the various Benches of the ITAT. 8.2 In the case of Harendra Nath Biswas vs DCIT Koltaka, ITA No. 186/Kol/2021 for the A.Y. 2019-20, similar issue has been decided vide order dated 16.7.2021 by the ITAT B Bench, Kolkata. The Relevant findings have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 ESI fund and as per the binding decision of the Hon ble High Court in Vijayshree Ltd. (supra) u/s 36(1)(va) of the Act since assessee had deposited the employees contribution before filing of Return of Income. Therefore, the assessee succeeds and we allow the appeal of the assessee. 9. Similar view has been taken by the ITAT Hyderabad SMC Bench in ITA No. 644/Hyd./2020 for the AY 2019-20 in the case of Salzgitter Hydraulics Private Ltd, Hyderabad vs ITO vide order dt 15.6.2021. The relevant findings given in para 2 of the said order read as under:- 2. Coming to the sole substantive issue of ESI/PF disallowance of ₹ 1,09,343/- and ₹ 3,52,622/-, the assessee s and revenue s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght 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 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 deduction i.e. accrual basis and the same was being allowed, as the liability did exist but the said amount thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der 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 (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 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 return is filed. Where for the assessment year 2002-03 the assessee had deposited employer s contribution as well as employees contribution towards provident fund and ESI after the due date, as prescribed under the relevant Act/Rules but before the due date for filing the return under the Income-tax Act: Held accordingly, that no disallowance could be made in view of the provisions of Section 43B as amended by the Finance Act, 2003. 14. From the above discussion, it is clear that there are series of decisions of various Hon ble High Courts on this issue and even Hon ble Jurisdictional High Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause, 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 superannuation fund or gratuity fund or any other fund for the welfare of the employees is actually paid by the assessee on or before the due date for furnishing the return of the income under sub-section (1) of section 139, assessee would be entitled to deduction 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 provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a)(ii) for ₹ 86,905/- 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 ₹ 86,905/- 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 similar other decisions on this issue. 16. In the present case, we have gone through the observation of ld. CIT(A), recorded in para 6 page- 7 to 12 of the impugned order which reads as under:- I have considered the provisions of Act, case laws, grounds of appeal and statements of facts. I have carefully perused the submission filed by the assessee. 6.1 In this regard, it is pertinent to note Circular No. 22/2015 dated 17/12/2015 issued by the CBDT is as under: 3. Accordingly, w.e.f. 1.4.1988, the settled position is that if the assessee deposits any sum payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate stands disallowed in view of the judgment in the case of M/s Checkmate Facility and Electronics Solutions Pvt. Ltd. v. DCIT (supra). We uphold the order of the lower authorities. Hence the ground of appeal of the assessee is dismissed. 6.3 The head note of the decision of High Court of Kerala in case of Merchem Ltd. [2015] 61 taxmann.com 119 (Kerala) is as under: Section 36(1)(va), read with sections 2(24)(x) and 43B,. of the Income-tax Act, 1961 - Employee's contributions (Section 36(1)(va) v. section 43B) 7 Assessment year 2010-11 - Whether section 36(1)(va) and section 43B(b) operate in different fields i.e. former takes care of employee's contribution and latter employer's contribution Held, yes - Whether, therefore, an assessee is entitled to get benefit of deduction under section 43B(b) as provided under proviso thereto only withtregard .tosportien amount paid by employer to contributory fund - Held, yes -. Whether so far as employee's contribution is concerned, assessee is entitled to get deduction of amounts as provided under section 36(1)(va) only if amounts so received from employee is credited in specified account within due date as prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to whether assessee-employer is entitled' to deduction in respect of sum paid (employees contribution to PE, ESI)'belatedly and therefore, for considering such question, application of section 36(1)(va), read with section 2(24)(x) alone is proper course and any other interpretation would only defeat object and scope of both provisions, viz., 43B and 36(1)(va) - Held, yes [Paras 18 to 27] [In favour of revenue] Section 43B, read with section 36(1)(va), of the Income-tax Act, 1961 - Business disallowance - Certain deductions to be allowed on actual payment - Employers 'contribution (General) Whether though an amendment has been introduced to section 43B, whereby actual date of payment is enough for considering deduction, if such date falls before date for filing return but in absence of any amendment made to section 36(1)(va), both contributions, viz., 'employees' and 'employers' cannot be brought under same scope and ambit of section 43B to claim deduction - Held, yes - Whether Circular No. 22/2015 dated 17-12-2015 , issued in consequence of amendment made td section 43B, to inform settled position that if assessee deposits contribution before due date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 thereunder or under any standing order, award, contract of service or otherwise.] [Explanation 2.-For the removal of doubts, it is hereby clarified that the provisions of section 43B shall not apply and shall be deemed never to have been applied for the purposes of determining the due date under this clause; ] 43B. Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of (b) any sum payable by the assessee as an employer by way of 63 contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees, shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him : [Provided that nothing contained in this section shall apply in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset. This principle of law is known as lex prospicit non respicit, which means law looks forward 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as made. In this circular, various amendments to the Income Tax Act are discussed amply demonstrating as to which amendments are clarificatory/retrospective in operation and which amendments are prospective. For example, explanation 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 Paragrap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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