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TMI Blog2022 (4) TMI 504X X X X Extracts X X X X X X X X Extracts X X X X ..... turn of income u/s 143(1). As before insertion of Explanation 2 to Section 36(1)(va) of the Act, there is ambiguity regarding due date of payment of employees contribution on account of provident fund and ESI, whether the due date is as per the respective Acts or up to the due date of filing of return of income of the assessee. As noted by Hon ble Supreme Court in the case of CIT vs. Vatika Township Pvt. Ltd.[ 2014 (9) TMI 576 - SUPREME COURT] an amendment made to a taxing statute can be said to be intended to remove hardship only of the assessee and not of the Department. Imposing of a retrospective levy on the assessee would cause undue hardship and for that reason Parliament specifically chose to make the proviso affective from a particular date. In the present case also, the amendment brought out by Finance Act, 2021 by way of Explanation-2 to s. 36(1)(va) of the Act along with Explanation-5 to s. 43B of the Act w.e.f. 01.04.2021 i.e. for and from assessment year 2021-22, cannot be applied retrospectively. Thus, from the above, it is clear that the amendment brought in the statute i.e., by Finance Act, 2021, the provisions of Section 36(1)(va) r.w.s. 43B of the Act amen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .A. No.262/Viz/2021. 1. The Commissioner of Income Tax (Appeals), National Faceless Appeals Centre (in short CIT(A), NFAC ) ought not to have disposed of the appeal as not maintainable by holding the view that the disputed issue is covered by the appeal filed against order passed u/s. 154 of IT Act, without appreciating the fact that the impugned intimation passed u/s, 143(1) is independent of the rectification procedure u/s. 154 of IT Act. 2. The Ld. CIT(A), NFAC failed to give a finding with regards to ground raised wherein the contest was that the impugned adjustment made to the returned income by way of disallowance of expenditure towards employees contribution to PF ESI is not within the ambit of provisions of sec.143(1) of IT Act. 3. The Ld.CIT(A), NFAC ought to have appreciated that delayed remittance of Employee s contribution under PF/ESI Act, if paid within the due date of filing of return of income u/s 139 of the IT Act, is an allowable deduction in view of the provisions of sec.43B of the I.T.Act as held by various judiciary. 4. For these and other grounds that may be urged at the time of hearing of the case, the appellant prays that the impugned d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due date for filing the return of income. This Tribunal in the case of Andhra Trade Development Corporation in I.T.A. No.434/Viz/2019 dated 05.05.2021 held that debatable issues are not permitted to be made adjustments while processing the return of income u/s 143(1) of the Act. For the sake of clarity and convenience, we extract para No.6 of the order in Andhra Trade Development Corporation which reads as under:- We have heard both the parties, perused the material placed on record. As per the adjustments made by the CPC, Bangalore to the extent of ₹ 7,31,016/- u/sec. 143(1)(a) is an issue which required to be verified with the relevant documents. Therefore, the adjustments are not within the scope provided u/sec. 143(1) (a) of the Act. As per proviso to section 143(1)(a), the AO is required to give an intimation before making such adjustments, either in writing or in electronic mode and the department has not demonstrated that it has given an intimation to the assessee proposing to make such adjustments. Therefore, the adjustment made by the CPC u/sec. 143(1)(a) is beyond the scope of the said section, hence, not permissible and accordingly deleted. Even otherwise, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 thereunder 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e date of filing of return of income of the assessee. As noted by Hon ble Supreme Court in the case of CIT vs. Vatika Township Pvt. Ltd., 367 ITR 466, an amendment made to a taxing statute can be said to be intended to remove hardship only of the assessee and not of the Department. Imposing of a retrospective levy on the assessee would cause undue hardship and for that reason Parliament specifically chose to make the proviso affective from a particular date. In the present case also, the amendment brought out by Finance Act, 2021 by way of Explanation-2 to s. 36(1)(va) of the Act along with Explanation-5 to s. 43B of the Act w.e.f. 01.04.2021 i.e. for and from assessment year 2021-22, cannot be applied retrospectively. 8. Thus, from the above, it is clear that the amendment brought in the statute i.e., by Finance Act, 2021, the provisions of Section 36(1)(va) r.w.s. 43B of the Act amended by inserting Explanation 2 is prospective and not retrospective. Hence, the amended provisions of Section 43B r.w.s. 36(1)(va) of the Act are not applicable for the assessment year 2018-19 but will apply from assessment year 2021-22 and subsequent assessment years. Hence, Ground No 3 of assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to claim deduction for the employees contribution made to PF after the due date prescribed under the PF Act, but before the due date prescribed for filing of income tax return in the light of the provisions contained in section 36(1)(va) of the Act and section 43B(b) of the Act. It is the contention of the assessee that there is no distinction between employer and employee contribution after omission of second proviso of section 43B of the Act by Finance Act, 2003 w.e.f. 1.4.2004. We find force in the arguments of the assessee for the reason that there is no difference between employees and employer contribution under the PF Act. Section 6 of Provident Fund Act provides for contribution and the manner in which such contribution shall be made. Paragraph 30 of the PF Scheme provides for payment of contributions. As per the said scheme, the employer at the first instance shall make the total contribution including employees share. Paragraph 32 provides for recovery of member share of contribution and as per the scheme, the employer can recover the employees share from the wages paid to the employee. Therefore, as per the PF Act and scheme of contributions, the contributions means ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yees contribution to PF in the light of the definition of the word contribution as per the provisions of section 2(c) of the PF Act. As per the said section, contribution would mean both employer s contribution and employees contribution. Accordingly, it was held that the provisions of section 43B of the Act allowing deduction for payment made before the due date of filing of Income Tax return cannot be ignored. Similarly, the ITAT, Hyderabad Tribunal in the case of Tetra Soft (India) Pvt. Ltd. Vs. ACIT (2015) 40 ITR (Trib) 470 held that when assessee remitted employees contribution to PF within due date of filing return of income u/s 139(1) of the Act, amount of employees contribution to PF cannot be disallowed. Similar view was upheld by the Chennai bench of the ITAT, in the case of ACIT Vs. Farida Shoes Pvt. Ltd. (2016) 46 CCH 29. The coordinate bench held that if assessee had not deposited employees contribution towards provident fund up to the due date as prescribed under relevant statute, but before due date of filing of return no disallowance could be made in view of the provisions of section 43B of the Act. In the case of CIT Vs. Udaipur Dugdh Utpadak Sahakari Sangh Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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