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of <h1>Amendment's Impact on Income Tax Deductions: Ruling Supports Assessee's Claim</h1> <h3>Shri. Kakalkoppa Ningappa Harish Versus DCIT, CPC, Bengaluru.</h3> Shri. Kakalkoppa Ningappa Harish Versus DCIT, CPC, Bengaluru. - TMI Issues:1. Justification of upholding the addition of Rs. 31,62,212/- u/s.43B of the Income Tax Act, 1961.2. Interpretation of amendments made by the Finance Act, 2021 to sections 36(1)(va) and 43B.3. Distinction between employees' and employer's contributions under the Act.4. Applicability of the amendments retrospectively.5. Comparison with previous judicial pronouncements.Detailed Analysis:Issue 1:The appeal focused on whether Revenue authorities were correct in adding Rs. 31,62,212/- under section 43B for delayed payment of employees' contribution to EPF and ESIC beyond the due date but before the return filing due date.Issue 2:The CIT(A) referred to the amendments by the Finance Act, 2021 to sections 36(1)(va) and 43B. The amendments clarified that section 43B does not apply to determine the 'due date' under section 36(1)(va), impacting deductions based on actual payments.Issue 3:The CIT(A) highlighted the legal distinction between employees' and employer's contributions under the Act. Failure to pay employees' contribution on time negates the employer's deduction permanently, whereas delay in employer's contribution leads to deferment of deduction under section 43B.Issue 4:The retrospective applicability of the amendments was debated. The tribunal found that the amendments were applicable prospectively from 01.04.2021, based on the explanatory memorandum to the Finance Act, 2021, and previous tribunal decisions on similar issues.Issue 5:Comparisons were drawn with judicial pronouncements like Essae Teraoka Pvt. Ltd. case by the Hon'ble Karnataka High Court, supporting the view that if the employee's contribution is made before the return filing due date, the assessee can claim a deduction.In conclusion, the appeal was allowed, emphasizing that the amendments by the Finance Act, 2021 were prospective and did not remove any hardship faced by the assessee. The judgment highlighted the importance of distinguishing between employees' and employer's contributions and upheld the assessee's claim regarding the disputed addition.
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