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of <h1>Tribunal deems Finance Act 2021 amendments clarificatory, applies retrospectively</h1> <h3>M/s. B.R.S. Precision Manufacturing Private Limited Versus DCIT, Central Processing Centre, Bengaluru</h3> M/s. B.R.S. Precision Manufacturing Private Limited Versus DCIT, Central Processing Centre, Bengaluru - TMI Issues:1. Interpretation of section 36(1)(va) and 43B of the Income Tax Act regarding the deduction of employees' share of contribution to ESI.2. Applicability of the amendments made by the Finance Act, 2021 to section 36(1)(va) and 43B of the Act.3. Legal distinction between employees' and employer's contribution under the Act.4. Retrospective application of the amendments to section 36(1)(va) and 43B by the Finance Act, 2021.5. Consistency of decisions on the issue across various tribunals and High Courts.Analysis:1. The case involved an appeal by a Private Limited Company against the order of CIT(A) regarding the addition of employees' share of contribution to ESI. The company contended that the contribution had been paid before the due date for filing the return, relying on relevant judicial decisions.2. The CIT(A) referred to the amendments made by the Finance Act, 2021 to section 36(1)(va) and 43B of the Act. The amendments clarified that the provisions of section 43B shall not apply for determining the due date under section 36(1)(va). The CIT(A) held that the amendments were declaratory in nature and applicable with retrospective effect.3. The CIT(A) distinguished between employees' and employer's contributions under the Act, emphasizing that they operate on different parameters and have different consequences for non-payment within specified dates. Various judicial pronouncements recognized this legal distinction, supporting the CIT(A)'s view.4. The High Court's decision in Essae Teraoka Pvt. Ltd. held that employees' contribution under section 36(1)(va) would be covered under section 43B. However, the tribunal found that the amendments by the Finance Act, 2021 were applicable only prospectively from 01.04.2021, based on the explanatory memorandum.5. The tribunal noted consistency in decisions on the issue across various cases and High Courts. It concluded that the impugned additions under section 36(1)(va) deserved to be deleted, allowing the appeal of the assessee. The tribunal accepted the Revenue's submission regarding rectification subject to statutory limitations.This detailed analysis of the judgment provides insights into the interpretation of relevant sections of the Income Tax Act, the impact of legislative amendments, legal distinctions between contributions, and the retrospective application of statutory changes, ensuring a comprehensive understanding of the case.
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