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TMI Blog2022 (6) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing grounds before us: 1. That the National Faceless Appeal Centre ('NFAC') has erred in law and on facts of the case in confirming the assessment made by Ld. Assistant Director of income tax, CPC ('AO CPC') by passing intimation under section 143(1) of the income tax act, 1961 ('the act') in case of the appellant at Rs.8,68,84,190/- as against the returned income of Rs.8,53,93,350/- without any proper basis and appreciation of the facts and circumstances of the case. 2. That the NFAC has erred in confirming the disallowance made by the AO CPC under section 36(1)(va) of the act of Rs. 14,90,835/- on account of delay in deposit of employee's contribution towards PF/ESI without considering the fact that such amount was duly deposited on or before due date of filing return under section 139(1) of the act and thereby disregarding the judicial pronouncements of the apex court and jurisdictional high court. 3. That the NFAC has erred in confirming the disallowance made by AO CPC under section 36(1)(va) of the act of Rs. 14,90,835/- on account of delay in deposit of employee's contribution towards PF/ESI without considering the correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of ITAT Bangalore in the case of Mavinahalli Shivananjappa Vijay Kumar vide ITA Nos. 596 597/Bang/ 2021 dated 13.12.2021 wherein it is held that explanatory memorandum to the Finance Act 2021 proposing amendment in Section 36(1)(va) as well as section 43B is applicable only from 01.04.2021. The relevant part of the decision is reproduced as under: 7. The Hon'ble Karnataka High Court in the case of Essae Teraoka Pvt. Ltd., (supra) has taken the view that employee's contribution under section 36(1)(va) of the Act would also be covered under section 43B of the Act and therefore if the share of the employee's share of contribution is made on or before due date for furnishing the return of income under section 139(1) of the Act, then the assessee would be entitled to claim deduction. Therefore, the issue is covered by the decision of the Hon'ble Karnataka High Court. The next aspect to be considered is whether the amendment to the provisions to section 43B and 36(1)(va) of the Act by the Finance Act, 2021, has to be construed as retrospective and applicable for the period prior to 01.04.2021 also. On this aspect, we find that the explanatory memorandum to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect to block assessment years, 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. 6.6 The Hon ble Supreme Court finally held that the proviso to Section 113 of the Act is prospective and not retrospective. For this Hon ble Supreme Court held 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, when seen in contradistinction to other amendments specifically stating those to be clarificatory or retrospectively depicting clear intention of the legislature. It can be seen from the same notes that few other amendments in the Income Tax Act were made by the same Finance Act specifically making those amendments retrospectively. For example, clause 40 seeks to amend S.92F. Clause iii (a) of S.92F is ame ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 sub-section (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 this proviso in the Finance Act, 2003 further makes it clear that such a provision was necessary to provide for surcharge in the cases of block assessments and thereby making it prospective in nature. The charge in respect of the surcharge, having been created for the first time by the insertion of the proviso to Section 113, is clearly a substantive provision and hence is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. Spectrum Consultants India (P.) Ltd. V. CIT [2013] 34 taxman.com 20/215 Taxman 597 (Kar.); 8. CIT v. Udaipur Dugdh Utpadak Shakari 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 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 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 be caused 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 w.e.f. 01.04.2021 i.e. for and from assessment year 2021-22 of Explanation-2 to s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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