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TMI Blog2023 (8) TMI 1456X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 36(1)(va) read with section 43B of the Act. 2) In the facts and circumstances of the case and in law the ld. Commissioner of Income-tax (Appeals) has erred in making disallowance of Rs.21,97,161/- while processing return of income under section 143(1)(a) of the Income-tax Act, 1961 overlooking the fact that impugned issue was debatable and cannot be adjusted under section 143(1) of the Act. 3) The impugned order is bad in law and on facts. 4) The appellant reserves the right to addition, after or omit all or any of the grounds of appeal in the interest of justice. 2. At the very outset, we may herein observe that the assessee who has challenged the order of the CIT(Appeals) dated 21.03.2022, which in turn arises from the order passed by the A.O u/s.154 of the Act dated 26.06.2019 had wrongly assailed in the grounds of appeal raised before us the intimation issued by the A.O u/s. 143(1)(a) of the Act, dated 18.05.2019. The Ld. Authorized Representative (for short 'AR) on being confronted with the aforesaid facts admitted the aforesaid mistake which had inadvertently crept in while computing the appeal. 3. Succinctly stated, the assessee had e-filed his return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal are not emanating from the order of rectification u/s 154 of the Act. Thus, the instant appeal is not maintainable. 5.3 Without prejudice to the above, it is to be noted here that the issue in this appeal is admissibility of deduction u/s 36(1)(va) of the Income-tax Act, 1961 of employees' contribution to provident fund and ESI if the employer deposits the same after the due date prescribed under the relevant Provident Fund/ESI Act. The bare reading of section 36(1)(va) makes it clear that deduction is available only if such sum is credited by the employer to the employees' account in the relevant fund or funds on or before the due date. The due date as per Explanation to the section 36(1)(va) means the date by which the assessee is required as a employer to credit the employees' contribution to the employees' account in the relevant fund under any Act, rule, order or notification issued thereunder. The relevant sections are reproduced for clarity : "Any sum received by the assesses 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 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not apply to employees' contribution u/s 36(1)(va). This contrary view is supported by the decisions of the following Hon'ble High courts, amongst several others :- (i) CIT v/s Merchem Ltd. [2015]378 ITR 443(Ker) (ii) CIT v/s Gujarat State Road Transport Corporation (2014) 366 ITR 170(Guj.) (iii) CIT v/s South India Corporation Ltd.(2000) 242 ITR 114(Ker) (iv) CIT v/s GTN Textiles Ltd.(2004)269 ITR 282(Ker) (v) CIT v/s Jairam & Sons [2004]269 ITR 285(Ker) 5.6 It is pertinent to note that in view of such conflicting decisions, the Finance Act, 2021 has amended section 36, which reads as under * "In section 36 of the Income-tax Act, in sub-section (1), in clause (va), the Explanation shall be numbered as Explanation 1 thereof and after Explanation 1 as so numbered, the following Explanation shall be inserted, namely: - `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;'." The finance Act, 2021 has also amended section 43B, as under- "In section 43B of the Income-tax Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have been applied" clarifies all doubts about the nature of the amendments. The memorandum to the finance bill clarifies that the amendments was introduced to protect the interest of the employees and ensure that the employers do not get unjustly enriched by keeping the money belonging to the employees. The above amendments are, therefore, clarificatory in nature indicating that it was never the intention of the legislature to include sums received by the employer from his employees, for which the provision of section 2(24)(x) applies in the list of deductions u/s 43B. 5.8 The Principles of Interpretation of Statutes do suggest that declaratory amendments only lay down the law as it was previously existing. In other words where substantive law originally enacted or amended is not able to clarify the intention of the Legislature, then in order to clarify the intention of the Legislature in bringing the law amendments are carried out to clarify the real intent. Such clarificatory or explanatory amendments are declaratory and they take effect from the date when the original provision was introduced. 5.9 Reference is made to the Supreme Court judgement in the case of Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... came into force, the amending Act also will be part of the existing law. The presumption against retrospective operation is not applicable to declaratory statutes In determining, therefore, the nature of the Act, regard must be had to the substance rather than to the form. If a new Act is "to explain" an earlier act, it would be without object unless construed retrospectively. An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the meaning of the previous Act. It is well settled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended An amending Act may be purely declaratory to clear a meaning of a provision of the principal Act which was already implicit. A clarificatory amendment of this nature will have retrospective effect (ibid., pp. 468-69). Where a statute is passed for the purpose of supplying an obvious omission in a former statute or to `explain' a former statute, the subsequent statute has relation back to the time when the prior Act was passed. The rule against retrospectively is inapplicable to such legislations as these are explanatory and declaratory in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd revise its opinion. All that it can do in these proceeding is to rectify the mistake apparent from the record. In the instant case, what the Assessing Authority has done is that it has re-appreciated the entire material on record and has come to a different conclusion than the conclusion which it had arrived at in the original Block Assessment order, Therefore, it is not a case of rectifying the error apparent from the record, it is only a case of reframing of the assessment giving reasons". Viewed thus and keeping in mind that the judicial opinions are divided on the subject-matter as discussed in para 5.4 and 5.5 above, it must be held that in the instant appeal, the grounds taken by the appellant are not sustainable and deserve to be rejected. Consequently, the grounds Nos. 1 and 2 are dismissed." 6. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 7. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment or reducing a refund or otherwise increasing the liability of the assessee or the deductor or the collector, shall not be made under this section unless the authority concerned has given notice to the assessee or the deductor or the collector of its intention so to do and has allowed the assessee or the deductor or the collector a reasonable opportunity of being heard. (4) Where an amendment is made under this section, an order shall be passed in writing by the income-tax authority concerned. (5) Where any such amendment has the effect of reducing the assessment or otherwise reducing the liability of the assessee or the deductor or the collector, the Assessing Officer shall make any refund which may be due to such assessee or the deductor or the collector. (6) Where any such amendment has the effect of enhancing the assessment or reducing a refund already made or otherwise increasing the liability of the assessee or the deductor or the collector, the Assessing Officer shall serve on the assessee or the deductor or the collector, as the case may be a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Millikarjun Bhavanappa Tirumale(1) this Court while Spelling out the scope of the power of a High Court under Art. 226 of the Constitution ruled that an error which has to be established by a long drawn process of reasoning on points where there may conceivably be two opinions cannot be said to be an error apparent on the face of the record. A decision on a debatable point of law is not a mistake apparent from the record-see Sidhamappa v Commissioner- of Income-tax, Bombay(2). The power of the officers mentioned in S. 154 of the Income-tax Act, 1961 to correct "any mistake apparent from the record" is undoubtedly not more than that of the High Court to entertain a writ petition on the basis of an "error apparent on the face of the record". In this case it is not necessary for us to spell out the distinction between the expressions 66 error apparent on the face of the record" and "mistake apparent from the record". But suffice it to say that the Income tax Officer was wholly wrong in holding that there was a mistake apparent from the record of the assessments of the first respondent." Considering the limited scope of Section 154 of the Act, we are of the considered view that as the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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