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TMI Blog2022 (5) TMI 1427X X X X Extracts X X X X X X X X Extracts X X X X ..... ) - HELD THAT:- We observe that employees contributions to PF / ESI paid after due date under PF / ESI laws but within the time allowed u/s 43B i.e. upto the due date u/s 139(1) for filing of return is allowable as deduction in computing taxable income of business and the assessee had rightly claimed the same. AO was not justified in disallowing the claim of the assessee. We therefore accept this Ground of assessee and direct the Ld. AO to make suitable rectification by deleting the disallowance. Therefore, Ground allowed for statistical purpose. Disallowance of the credit of TDS - HELD THAT:- A bare reading of sub-rule (3)(i) of Rule 37BA makes it unambiguously clear that the credit of TDS shall be allowed in the year in which the relevant income is taxable. As can be seen from the submission of Ld. AR, the relevant-income out of which the TDS was deducted, had been offered by the assessee for taxation in the assessment-year 2017-18 according to the regularly followed method of accounting. Hence the credit of TDS deserves to be allowed in the assessment-year 2017-18 in accordance with the mandate of section 199 read with Rule 37BA. Lower authorities did not have occasio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n law, without jurisdiction, it is based on incorrect interpretation of law and without allowing proper and reasonable opportunity of being heard, moreover the facts have also been incorrectly construed. 2. That on the facts and in the circumstances of case and in law, the National Faceless Appeal Centre, Delhi erred in rejecting appeal filed by the assessee summarily by stating that appellant has not filed appeal against intimation order u/s 143(1) and tried to take back door entry by filing appeal against order u/s 154 for which the original cause of action has arisen at the stage of 143(1) itself without appreciating the fact that on first stage appellant has taken the remedy of filing application u/s 154 which is legal and as per the provision of Income Tax Act. Thus the order of the National Faceless Appeal Centre is illegal and liable to be set aside to decide on merits. 3. That on the facts and in the circumstances of the case and in law the National Faceless Appeal Centre, Delhi erred in not deciding the following grounds of appeal on merits: a) That on the facts and in the circumstances of the case and in law the Ld. A.O. (CPC) erred in making disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal of assessee in limine by observing in Para No. 5 to 6 of his order as under: 5. It is pertinent to mention here that the appeal is not against the intimation order u/s 143(1). The appellant had filed an application u/s 154 before CPC. Thereafter, the CPC had passed order u/s 154 rejecting the request of the appellant for rectification of the mistake. It is against this order, the appellant has filed the present appeal. The original cause of action arises at the stage of 143(1) itself when the CPC had processed the return of income. Thereafter, the appellant has filed rectification application which has been rejected and against this, the appellant had filed the present appeal. 5.1 On perusal of these facts, it appears that the appellant is trying to take back door entry by filing an appeal against order u/s 154 for which the original cause of action has arisen at the stage of 143(1) itself. As per the provisions of the Act, the appellant could have filed an appeal against the intimation u/s 143(1) of the CPC dated 09.11.2018. However, the appellant has not filed an appeal against the intimation u/s 143(1). Thereafter, the appellant has filed a rectification applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adopted by the assessee was not permissible in the issues involved and therefore the Ld. CIT(A) was justified in dismissing the appeal of assessee in limine. With these submissions, the Ld. DR prayed to uphold the order of Ld. CIT(A). 9. We have considered the rival submissions of both sides and also perused the record. We are very much aware of the recent decision of ITAT, Jodhpur Bench in the case of Akbar Mohammad, Nagaur Vs. ACIT, CPC, Bangalore ITA No. 108 109/Jodh/2021 order dated 31.01.2012 in which the Hon ble Co-ordinate Bench had resolved an identical controversy by holding as under: 6.1 Of course, it is a case in point that the assessee did not file any appeal against the intimations passed us 143(1) of the Act and the Ld. Sr. DR is right to the extent that the assessee cannot be given relief for that reason. However, it is also a settled law that the assessee cannot be taxed on an amount on which tax is not legally imposable. Although, the assessee might have chosen a wrong channel for redressal of his grievance, all the same, it is incumbent upon the Tax authorities to burden the assessee only with correct amount of tax and not to unjustly benefit at the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the disallowance made by Ld. AO is illegal and deserves to be deleted. 13. Per contra, the Ld. DR relied upon the orders of lower authorities. He further submitted that in following decisions it has been held that once the employees contributions are paid after the due dates under PF / ESI laws, disallowance is attracted even if the assessee has made payments within the time allowed u/s 43B i.e. upto the due date u/s 139(1) for filing of return: (a) Hon ble Gujarat High Court in CIT vs. Gujarat State Road Transport Corporation, (2014) 41 taxmann.com 100 (b) Hon ble Gujarat High Court in Pr. CIT vs. M/s Suzlon Energy Ltd. (2020) 115 taxmann.com 340 (c) Hon ble Kerala High Court in CIT Vs. Merchem Ltd. (2015) 378 ITR 443 The Ld. DR further submitted that the Finance Act, 2021 has also inserted Explanation 2 to Section 36(1)(va) and Explanation 5 to Section 43B as under: Section 36(1)(va): 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; Section 43B: Explanation 5.-For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this issue. In this situation, we are mindful of the decision in Vegetable Products Ltd. 88 ITR 192 wherein the Hon ble Supreme Court has held that if two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted. In view of this, the decisions favouring the assessee shall get preference over the decisions against the assessee. Being so we hold that the employees contributions paid after due date under PF / ESI law but within the time allowed u/s 43B, are allowable as deduction. Regarding the amendments made through Finance Act, 2021, it is specifically mentioned by the legislature that the amendments are effective from 01.04.2021. Further the Memorandum explaining the Provisions in the Finance Bill, 2021 clearly prescribes thus: These amendments will take effect from 1st April, 2021 and will accordingly apply to the assessment year 2021-22 and subsequent assessment years. Thus, the legislature itself has categorically stated that the amendments shall apply to the assessment year 2021-22 and subsequent assessment years. Therefore these amendments are not applicable to the assessmentyears preceding the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S as per books of account and Form 26AS of assessment-year 2017-18 and 2018-19. We are not reproducing the same for the sake of brevity but the crux of the submission is that although the payers have deducted TDS in the financial year relevant to the assessment-year 2018-19, the assessee has offered the relevant income in the assessment-year 2017-18 as per regular method of accounting and therefore claimed the credit of TDS in the assessment-year 2017-18 which is very much correct and allowable in accordance with the following provision of section 199: 199. (1) Any deduction made in accordance with the foregoing provisions of this Chapter and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made, or of the owner of the security, or of the depositor or of the owner of property or of the unit-holder, or of the shareholder, as the case may be. (2) Any sum referred to in sub-section (1A) of section 192 and paid to the Central Government shall be treated as the tax paid on behalf of the person in respect of whose income such payment of tax has been made. (3) The Board may, for the purposes of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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