9911796707
TMI Blog2023 (9) TMI 1609X X X X Extracts X X X X X X X X Extracts X X X X ..... eme - HELD THAT:- We observe that Ld. CIT(Appeals) also made no observation on the contention of the counsel for the assessee that payments to National Pension Scheme are governed by PFRDA Act, 2013 wherein no due date has been prescribed for the deposit of the aforesaid amount as employee s contribution to National Pension Scheme. Accordingly, in interest of justice, the matter is being restored to the file of Ld. CIT(Appeals) for de novo consideration, and to specifically look into the contention put forth by the counsel for the assessee that the tax auditor in the Tax Audit Report has specifically stated that all the aforesaid payments have been made within the due prescribed date. Further, the contention of the assessee that under the PFRDA Act 2013, no due date has been prescribed and hence there is no question of any disallowance for employee s contribution to National Pension Scheme once the payment has been made before the due date of filing of return of income, may also be looked into while passing the order. - SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER For the Appellant: Shri Biren Shah Shri G. M. Thakor, A.Rs. For the Responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 08 crores and claimed the refund of Rs. 3.15 crores for the year under consideration. The Department issued notice under Section 143(1)(a) of the Act on 14th June 2020, in which the following adjustments were made: Particulars Amount (in Rs.) Total Income as per Return of Income 1,84,08,87,980/- Add: Disallowance u/s 43B of the act 64,31,273/- Add: Disallowance u/s 36(1)(va) 1,08,40,882/- Total Assessed income 1,85,81,60,135/- 4. The aforesaid disallowances were confirmed by Ld. CIT(Appeals), with the following observations: 6. Ground no. 2 3 are related to the addition of Rs. 64,31,2737- Rs. 1,08,40,882/- under section 43B under section 36(1)(va) on account of other welfare fund. Brief facts as noted from impugned CPC intimation under section 143(1) that an addition has been made by Deputy Commissioner of Income Tax, CPC, Bengaluru account of delay in depositing the other welfare fund. 7. I have carefully considered the facts of the case and submission filed by appellant, during the appellate proceedings. I have gone through the contentions of the appellant, and material available on record. It is noted that the appellant has mainly contested the ground on the plea that the releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be admissible for the accounting year. This provision does not cover employee contribution referred to in clause (va) of subsection (1) of section 36 of the Act. Though section 43B of the Act covers only employer's contribution and does not cover employee contribution, some courts have applied the provision of section 43B on employee contribution as well. There is a distinction between employer's contribution and employee's contribution towards welfare fund. It may be noted that employee's contribution towards welfare funds is a mechanism to ensure the compliance by the employers of the labour welfare laws. Hence, it needs to be stressed that the employer's contribution towards welfare funds such as ESI and PF needs to be clearly distinguished from the employee's contribution towards welfare funds. Employee's contribution is employee own money and the employer deposits this contribution on behalf of the employee in fiduciary capacity. By late deposit of employee contribution, the employers get unjustly enriched by keeping the money belonging to the employees. Clause (va) of sub-section (1) of Section 36 of the Act was inserted to the Act vide Finance A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and clause (va) of sub-section (1) section 36 of the Income- tax Act. Further, the expressions For the removal of doubts and it is hereby clarified makes it evident that the aforementioned amendment was to remove all doubts as to the meaning of existing law and to correct a construction considered erroneous by the Legislature. Hence, the said amendment is to be taken to be retrospective. It is well settled that if a statute is curative or merely declaratory of the previous law, retrospective operation is intended. 11. In this regard, reliance is placed on the decision of Hitech India (P) Ltd. Vs Union Of India reported 227 ITR 446 wherein the Hon'ble court interalia held thus:- Under section 2(24)(x), any sum received by an assessee from his employees as contribution to any provident fund or superannuation fund or any fund set up under the ESI Act, or any other fund for the welfare of such employees, would be 'income' under section 2(24)(x) in his hands and that would be allowed as permissible deduction under section 36(1)(va) in computing business income under section 28 provided the assessee credits it to the relevant fund. Under section 436, the sum referred to in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (b) and clauses (a), (c) and (d) of section 438. Clause (b) deals with the sum payable by the assessee as an employer by way of contribution. The employer, who is in a dominant position, deducts the employees' contribution from the wages/pay at the time of disbursement and retains the amounts with hint beyond the permissible period; further, he is not discharging his obligation by paying the employer's contribution which ought to have been parted with by him to form the total contribution. Thus, he is unauthorizedly retaining the total amount of contributions as the employer. Such is not the position with reference to sums covered by clauses (a), (c) and (d). The classification has nexus with the object soght to be achieved by the provisos (I) and (2) of section 43B and Explanation to section 36(1)(va) and that is to ensure strict compliance with the beneficial legislation dealing with worker s right and benefits. Therefore, there was no discrimination as alleged by the petitioner and the writ petition was to be dismissed. 12. In view of above amendment, there is no scope reason to interfere with the addition made. 13. In view of above, and the amendment as discussed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the assessee is entitled to deduction of Rs. 64,31,272/- under Section 43B of the Act. 7. In response, the Ld. DR relied on the observations made by Ld. CIT(Appeals) in the appellate order. 8. We have heard the rival contentions and perused the material on record. On going to the facts placed before us, we observe that the tax auditor in their Tax Audit Report has specifically pointed out that sum of Rs. 64,31,273/- pertains to claim of bonus under Section 43B of the Act, and that the said liability pre-existed on the first day of the previous year and that the same was actually paid by the assessee during the previous year under consideration. Accordingly, it is seen that the tax auditor himself has certified that amount of Rs. 64,31,273/- under Section 43B of the Act as a pre-existing liability which was paid by the assessee during the previous year and the assessee has also claimed the above amount while filing the return of income. Accordingly, looking into the facts of the instant case, this ground of the assessee s appeal is allowed. 9. In the result, ground number 2 of the assessee s appeal is allowed. Disallowance of Rs. 1,08,40,882/-on account of payment of employee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee submitted that as per Tax Audit Report, the payment to the National Pension Scheme (referred to as any other welfare fund in the Tax Audit Report at the Sr. No. 25 to 36, clause 20 (b)) has been made by the assessee within the due date as mentioned Tax Audit Report. Accordingly, we observe that there is an apparent discrepancy between the findings of Ld. CIT(Appeals) (wherein he has dismissed the appeal of the assessee on the ground that the payments have been made by the assessee beyond the due date prescribed under the relevant Act) and submissions made by the assessee before us, wherein it was submitted that all the payments have been made before the due prescribed date as per the Tax Audit Report. Further, we observe that Ld. CIT(Appeals) also made no observation on the contention of the counsel for the assessee that payments to National Pension Scheme are governed by PFRDA Act, 2013 wherein no due date has been prescribed for the deposit of the aforesaid amount as employee s contribution to National Pension Scheme. Accordingly, looking into the facts of the instant case, in interest of justice, the matter is being restored to the file of Ld. CIT(Appeals) for de novo cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
