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TMI Blog2022 (5) TMI 598X X X X Extracts X X X X X X X X Extracts X X X X ..... 104 and 121/Chny/2022 - - - Dated:- 11-4-2022 - Mahavir Singh, Vice President and Manoj Kumar Aggarwal, Member (A) For the Appellant : N. Arjunraj, CA for S. Sridhar, Advocate, Yeshwanth Kumar, CA, R. Meenakshi and D. Palanivel, Advocates ORDER Manoj Kumar Aggarwal, Accountant Member 1. All these appeals were heard as bunched matters since the same pertain to single common issue of assessee's eligibility to claim deduction of Employees' Contribution to PF/ESI in terms of Sec. 43B r.w.s. 36(1)(va) as well as 2(24)(x). During hearing before us, it was admitted position that the facts as well as issue was pari-materia the same in all the appeals and therefore, adjudication in any one appeal shall mutatis-mutandis apply to all the other appeals also. The lead order in these bunched matters has been passed by us separately in the matter of M/s. Benco Thermal Technologies Private Ltd. V/s. Asstt. Director of Income Tax(ITA No. 281/Chny/2021 on 23.02.2022). Accordingly, our adjudication as contained therein would equally apply to all these consolidated appeals. All these appeals have been filed by the assessee for various assessment years and assail the denial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No. No. Of Day s Delay 1 146/Chny/2022 69 days 2 147/Chny/2022 17 days 3 145/Chny/2022 22 days 4 55/Chny/2022 95 days 5 39/Chny/2022 2 days 6 40/Chny/2022 6 days 7 104/Chny/2022 3 days 8 121/Chny/2022 142 days The Ld. Sr. Dr has opposed the condonation of delay. However, considering the fact that impugned orders were passed during lockdown period arising out of Covid-19 pandemic and keeping in view the contents of condonation petition/affidavit as filed by the assessee, we condone the delay in all the appeals and proceed for adjudication of the same on merits. 5. In the above background, the assessee's ground on merit would succeed considerin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourts have held that the provisions of Sec. 43B would be applicable to employees' contribution as well. In other words, if the employees' contribution has been paid by the assessee before due date of filing of return of income as per Sec. 139(1), the deduction would still be available to the assessee notwithstanding the fact that the payment was made beyond the due date as per the applicable Acts Rules governing the welfare funds. 6. One of such case is the decision of Hon'ble Karnataka High Court in the case of Essae Teraoka (P.) Ltd. (43 Taxmann.com 33 : 04.02.2014). In this decision, the Hon'ble Court distinguished the case law of Hon'ble Gujarat High Court in the case of CIT V/s. Gujarat State Road Transport Corpn. (41 Taxmann.com 100; 26.12.2013) and held that employees' contribution so paid by the assessee before due date of filing of return of income u/s. 139(1) would be an allowable deduction. The same was on the reasoning that the provisions of Sec. 43B provide an extension to the employer to make payment of welfare funds by 'due date' applicable for furnishing the return of income u/s. 139(1). It was held that the provisions of Sec. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contribution of the employee. That being so, if the contribution is made on or before the due date for furnishing the return of income u/s. 139(1), the employer is entitled for deduction. 7. Similar is the ratio of decision of Hon'ble Rajasthan High Court in the case of Pr. CIT V/s. Rajasthan State Beverages Corpn. Ltd. (84 Taxmann.com 173; 04.08.2016) which followed the earlier decision in CIT V/s. State Bank of Bikaner Jaipur (43 Taxmann.com 411; 06.01.2014). The Hon'ble Court, in the case of CIT V/s. State Bank of Bikaner Jaipur (supra) held that the provisions of Sec. 43B starts with a notwithstanding clause would thus override Sec. 36(1)(va) and if read in isolation, Sec. 43B would become obsolete. The Hon'ble Court further held that these provisions were 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. The court observed that the respective Act such as PF etc. also provides that the amounts can be paid later on subject to payment of interest and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into denial of deduction to the assessee in terms of Sec. 36(1)(va) r.w.s. 2(24)(x). 10. So far as the decision of jurisdictional High Court of Madras is concerned, the coordinate bench of Hon'ble Court has rendered similar decision favoring assessee in CIT v. Industrial Security Intelligence India (P.) Ltd. [TCA No. 585 of 2015, dated 24-7-2015] and held as under:- 5. We find that the Tribunal has rightly relied on the decision of the Supreme Court in the case of CIT V. Alom Extrusions Ltd. reported in 319 ITR 306, whereby, the Supreme Court held that omission of second proviso to Section 43B and amendment to first proviso by Finance Act, 2003 are curative in nature and are effective retrospectively, i.e., with effect from 1.4.1988 i.e., the date of insertion of first proviso. The Delhi High Court in the case of CIT V. Amil Ltd. reported in 321 ITR 508 held that if the assessee had deposited employee's contribution towards Provident Fund and ESI after due date as prescribed under the relevant Act, but before the due date of filing of return under the Income Tax Act, no disallowance could be made in view of the provisions of Section 43B as amended by Finance Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... )(va) and accordingly, the employees' contribution as paid by the assessee before due date of filing of return u/s. 139(1) would still be an allowable deduction notwithstanding the fact that the payment was made beyond due date as specified in the relevant statute governing those welfare funds. 12. So far as the effect of amendment brought in by Finance Act, 2021 is concerned, we find that Finance Act, 2021 has proposed amendment to Sec. 36(1)(va) and Sec. 43B to clarify the position that Sec. 43B would never apply to such contributions. For the same, an explanation-2 has been inserted in Sec. 36(1)(va) which state that Section 43B would not apply and is presumed never to have been applied to establish the due date under this sub-section. Similarly, Explanation-5 has been inserted to Section 43B to explain that the rules of that section do not apply and are never regarded to have applied to any funds received by the assessee from employees. The controversy as to the date of applicability of amendment arises in view of the fact that both the Memorandum as well as the Finance Bill state that relevant amendment will take effect on 01/04/2021 and apply to Assessment Year 2021- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted by the employer within due date specified by the PF/ESI Acts, will still be permissible deduction if the same is actually paid in pursuance of sec. 43B. The CIT(A) further noted the decisions in favour of assessee in para 7.7, and the same are as under: 1. CIT v. Alom Extrusions Ltd. [2009] 185 Taxman 416/ 319 ITR 306 (SC) 2. Aimil Ltd. (supra) 3. CIT v. Nispo Polyfabriks [2013] 350 ITR 327/213 Taxman 376/30 taxmann.com 90 (HP); 4. CIT v. Alembic Glass Industries Ltd. [2015] 279 ITR 331/149 Taxman 15 (Guj.); 5. CIT v. Sabari Enterprises [2008] 298 ITR 141 (Kar); 6. CIT v. Pamwi Tissues Ltd. [2009] 313 ITR 137 (Bom.); 7. Spectrum Consultants India (P.) Ltd. v. CIT [2013] 34 taxmann.com 20/215 Taxman 597 (Kar.); 8. CIT v. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. [2013] 35 taxmann.com 616/217 Taxman 64 (Mag.)/[2014] 366 ITR 163 (Raj.) and 9. CIT v. Hemla Embroidery Mills (P.) Ltd. [2013] 37 taxmann.com 160/217 Taxman 207 (Mag.)/[2014] 366 ITR 167 (Punj. Har.). 6.8 In the present case also, before insertion of Explanation 2 to section 36(1)(va) of the Act, there is ambiguity regarding due date of payment of employees' c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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