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TMI Blog2022 (6) TMI 1195X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee filed its return of income on 31.10.2018 which was processed u/s. 143(1) of the Act whereby an adjustment was made on account of disallowance of claim of deduction with respect to employees' contribution towards PF deposited belatedly. During the course of assessment proceedings, the CPC, Bangalore (for short "AO") confirmed the disallowance of Rs. 18,49,116/- on account of late deposit of employees contribution towards PF. The assessee challenged the said adjustment before the Ld. CIT(A)/NFAC and contended that as per the binding precedents if the payment is made in the government account before due date of filing of return of income u/s. 139(1) of the Act then as per provisions of Section 43B of the Act, no disallowance is made. The Ld. CIT(A)/NFAC did not accept this contention of the assessee and confirmed the disallowance by considering the amendment in Section 36(1)(va) of the Act whereby an explanation (2) as well as explanation (5) to Section 43B of the Act was inserted being retrospective in nature. 2.3. The Hon'ble Rajasthan High Court as well as other Hon'ble High Courts are consistently holding that where Assessee had paid employees contributio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24/08/2009 respectively for the Assessment Year 2002-03, 2001-02 and 2002-03 respectively and decision Hon Rajasthan High Court in CIT vs. State Bank of Bikaner and Jaipur (2014) 363 ITR 70, CIT vs. Jaipur Vidyut vitran Nigam Ltd. (2014) 363 ITR 307, CIT vs. Udaipur Dugdh Utpadak Sahakan Sangh Ltd. (2014) 366 ITR 163. The facts and circumstance are exactly same as in the appellant case. Hon'ble Rajasthan High Court In the case of [2014] CIT v. State Bank of Bikaner & Jaipur 43 taxmann.com 11 (Raj), the Hon'ble Rajasthan High court has held that" On perusal of section 36(1)(va) and section 43(B)(b) and analyzing the judgments rendered, in our view as well, it is clearly 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 assessee in claiming the deduction i.e. accrual basis and the same was being allowed, as a deduction was not being deposited even after lapse of several years. Therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. It was submitted that against the aforesaid decision of Hon'ble Rajasthan High Court, the SLP filed by the department before the Hon'ble Supreme Court has been dismissed on 04.07.2017 and therefore, the decision of Hon'ble Rajasthan High Court has attained finality As regards to Ld. CIT Appeal referred for explanation 2 to section 36(1)(va) added by Finance Act 2021, it is submitted that the amendments in Sections 36(va) as well as 43B vide Finance Act, 2021 to this effect, the CBDT has issued Memorandum of Explanation that the same applies w.e.f. 1.4.2021 only. It is further not an issue that the foregoing legislative amendments have proposed employers contributions; disallowances u/s.43B as against employee u/s. 36(va) of the Act; respectively However, keeping in mind the fact that the same has been clarified to be applicable only with prospective effect from 1.4.2021. Furthermore, after the amendments brought about by the F.A. 2021, there are various decision by relying, inter-alia, on the decisions of the jurisdictional High Court has allowed the appeal of the Appellant on this issue. a) The Hon'ble ITAT Jodhpur Bench in case of Mohangarh Engineers and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As it is admitted fact that the assessee has deposited all contribution on account of P.F. and ESIC received from the employee before due date of submission of the return which are admissible as per above judicial pronouncement of Jurisdictional Hon High Court and this ITAT bench hence. Also as per various decision as referred above, the issue is debatable hence adjustment u/s. 143(1) cannot be made. As such addition made by the Ld. A.O. in adjustment u/s. 143(1) is wrong, unjust and erred in law. Your honor is requested to kindly delete the addition." The Ld. AR also relied upon the order dated 25-04-2019 of ITAT Jaipur Bench in the case of assessee (Gosil Exports Pvt. Ltd.) in ITA No. 1064/JP/2019 for the assessment year where on similar issue the appeal of the assessee was allowed. 2.6. On the other hand, the Ld. DR supported the orders of the lower authorities. 2.7. We have heard both the parties and perused the materials available on record. The Bench noted during the course of hearing that the AO made an addition of Rs. 18,49,116/- on account of late deposit of employees PF/ESIC by the assessee. However, the assessee deposited the employees PF/ESIC contribution before d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 decision, the Hon'ble High Court was pleased to held as under: "20. On perusal of Sec. 36(1)(va) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 (supra). In all these decisions, it has been consistently held that where the PF and ESI dues ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the instant case. Similar view has been taken by the Coordinate Bangalore Benches in case of Shri Gopalkrishna Aswini Kumar vs. ACIT (supra) wherein it has held 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 Finance Act, 2021 proposing amendment in section 36(1)(va) as well as section 43B is applicable only from 01.04.2021. These provisions impose a liability on an assessee and therefore c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act is called for when the amounts are deposited before filing the return of income. Similar view has also been taken by the Hon'ble Punjab & Haryana High Court in the case of CIT vs. Hernia Embroidery Mills (P) Ltd. (supra) and Indian Geotechnical Services (supra). As far as the applicability of amendment made by Finance Act 2021 is concerned, I find that the Co-ordinate Bench of Tribunal in the case of Indian Geotechnical Services (supra) has held that amendment made by Finance Bill 2021 shall take effect from 1st April 2021 and will accordingly apply to A.Y. 2021-11 and subsequent years. In the present case assessment year involved is 2018-19 and therefore following the aforesaid decision in the case of Indian Geotechnical Services (supra), I am of the view that the amended provisions would have no application to the case under consideration. Before me, Learned DR has relied on the decision of Co-ordinate Bench of Tribunal in the case of Vedvan Consultants Pvt. Ltd. (supra). It is settled law that when two judgments are available giving different views then the judgment which is in favour of the assessee shall apply as held in case of Vegetable Products Ltd. 82 ITR 192 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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