TaxTMI 
TaxTMI 
2021 (11) TMI 329
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....r the reason that the amounts were not paid within the due date specified under the respective Acts. Further, the Assessing Officer also disallowed a sum of Rs. 9,915 being GST payment, since the same was not paid within the due specified u/s 139(1) of the I.T.Act. 4. Aggrieved, the assessee filed an appeal to the first appellate authority. The CIT(A) dismissed the appeal of the assessee. The relevant finding of the CIT(A) as against the disallowance of Rs. 6,21,831 reads as follows:- "5.3 I have carefully gone through the assessment order. I have also carefully perused written submission and supporting documents filed by the appellant. In the written submission the appellant has mentioned that such deductions are allowable u/s 43B even when the payments are delayed as per the due dates of PF and ESI Acts, if the employee's contribution is paid before the due date of filing return u/s 139(1) of the I.T.Act. However, the proviso to section 43B, which allows deduction if it is made before the due date of filing return u/s 139(1) has been rendered ineffective by inserting Explanation 5 to the section 43B which states that the provisions of the said section do not apply and deemed t....
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.... 139(1) of the I.T.Act, though inadvertently the reference was made to section 40A(3) of the I.T.Act instead of u/s 43B of the I.T.Act. Therefore, it was contended that the amount which is already disallowed u/s 40A(3) of the I.T.Act by the assessee voluntarily being again disallowed u/s 43B of the I.T.Act would tantamount to double taxation. In this context, the learned AR had placed copies of the computation of income, copy of the income tax return filed for the relevant assessment year, etc. 6. The learned Standing Counsel, on the other hand, as regards the disallowance of Rs. 6,21,831 is concerned, submitted that the amendment to section 36(1)(va) and 43B of the I.T.Act is clarifactory and has got retrospective operation. In this context, the learned Standing Counsel relied on the judgment of the Hon'ble Apex Court in the case of CIT Vs. Gold Coin Health Food Pvt. Ltd., reported in 304 ITR 308 (SC). As regards the disallowance of Rs. 9,915, the learned Standing Counsel placed reliance on the orders passed by the Income Tax Authorities. 6.1 In the rejoinder, the learned AR submitted that the case law relied on by the learned Standing Counsel, namely, CIT Vs. Gold Coin Health F....
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....f the PF Scheme provides for Mode of payment of contributions. As provided in sub para (1), the employer shall, before paying the member, his wages, deduct his contribution from his wages and deposit the same together with his own contribution and other charges as stipulated therein with the provident fund or the fund under the ESI Act within fifteen days of the closure of every month pay. It is clear that the word "contribution" used in Clause (b) of Section 43B of the IT Act means the contribution of the employer and the employee. That being so, if the contribution is made on or before the due date for furnishing the return of income under sub-section (1) of Section 139 of the IT Act is made, the employer is entitled for deduction. 21. The submission of Mr.Aravind, learned counsel for the revenue that if the employer fails to deduct the employees' contribution on or before the due date, contemplated under the provisions of the PF Act and the PF Scheme, that would have to be treated as income within the meaning of Section 2(24)(x) of the IT Act and in which case, the assessee is liable to pay tax on the said amount treating that as his income, deserves to be rejected. 22. ....
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.... the A.O. to grant deduction in respect of employees' contribution to ESI since the assessee has made payment before the due date of filing of the return of income u/s 139(1) of the I.T.Act, It is ordered accordingly." 7.1 The learned Standing Counsel had relied on the judgment of the Hon'ble Apex Court in the case of CIT Vs. Gold Coin Health Food Pvt. Ltd., (supra) to content that the amendment to section 36[1][va] and 43B of the Act is clarificatory. The judgment of the Hon'ble Apex Court in the case of CIT v. Gold Coin Health Food Pct. Ltd. (supra) is distinguishable. The Hon'ble Apex Court was considering the question of whether penalty can be imposed u/s.271(1)(c) of the Act for concealment of income where returned losses were reduced in assessment and there was no tax payable by the assessee. Earlier, the Hon'ble Apex Court in the case of Virtual Soft Systems in 289 ITR 83 [SC] had taken the view that no penalty could be levied on mere reduction in loss as there would be no tax payable by the assessee, which was a sinequo- non for imposition of penalty. Amendments were made by the Finance Act, 2002, to Section 271(1)(iii) of the Act by incorporating the expre....
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....d gains' refers to positive income whereas losses represent negative profit or in other words minus income. This aspect does not appear to have been noticed by the Bench in Virtual's case (supra). Reference to the - order by this Court dismissing the revenue's Civil Appeal No.7961 of 1996 in Commissioner of Income Tax v. Prithipal Singh and Co. is also not very important because that was in relation to the assessment year 1970-71 when Explanation 4 to Section 271 (1) ((c) was not in existence. The view of this Court in Horprasods case (supra) Leads to the irresistible conclusion that income also includes Losses. Explanation 4 (a) as it stood during the period 1.4.1976 to 1.4.2003 has to be considered in the background. 8. It appears that what the Finance Act intended was to make the position explicit which otherwise was implied. The recommendations of the Wanchoo Committee pursuant to which Explanation 4(a) was inserted w.e.f. 1.4.1976 needs to be noted. At para 2.74 it was noted as follows: "2.74 We are not unaware that linking concealment penalty to tax sought to be evaded can, at times, lead to anomalies. We would recommend that, in cases where the concealed inco....
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....essed income is a loss, still penalty was leviable thereon even during the period 1.4.1976 to 1.4.2003. Even in the Circular dated 24.7.1976, referred to above, the position was clarified by Central Bureau of Direct Taxes (in short' CBDT). It is stated that in a case where on setting of the concealed income against any loss incurred by the assessee under any other head of income or brought forward from earlier years, the total income is reduced to a figure lower than the concealed income or even to a minus figure the penalty would be imposable because in such a case "the tax sought to be evaded" will be tax chargeable on concealed income as if it is "total income". " 7.2 Thus, the judgment of the Hon'ble Apex Court in CIT Vs. Gold Coin Health Food [P] Ltd., [2008] 304 ITR 308 [SC], took into consideration the evolved jurisprudence on the point of whether income includes loss and has interpreted that even before the amendment with effect from 01.04.2003, there was liability to penalty. Hence, it was concluded by the Hon'ble Apex Court that the clarificatory nature of the amendment cannot be a ground to hold that earlier no penalty could be levied. However, the position ....
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....islative drafting and latter one is to be found in the various principles of 'Interpretation of Statutes'. Vis-a-vis ordinary prose, legislation differs in its provenance, lay-out and features as also in the implication as to its meaning that arise by presumptions as to the intent of the maker thereof. 31. Of the various rules guiding how legislation has to be interpreted, one established rule is that unless a contrary intention appears, legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today rind in force and not tomorrow's backward adjustment of it. Our belief in the nature of the law is founded on the bed rock that every human being is entitled to arrange his affairs by relying on the existing law and should 'not find that his plans have been retrospectively upset. This principle of *law is known as lex prospicit non respicit: law looks forward not backward. As was observed in Phillips vs. Eyre', a retrospective legislation is contra....
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....rresponding detriment on some other person or on the public generally and where to confer such benefit appears to have been the legislators object, then the presumption would be that such legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. This exactly is the justification to treat procedural provisions as retrospective. In Government of India Et Ors. v. Indian Tobacco Association', the doctrine of fairness was held to be relevant factor to construe a statute conferring a benefit, in the context of it to be given a retrospective operation. The same doctrine of fairness, to hold that a statute was retrospective in nature, was applied in the case of Vijay v. State of Maharashtra Et Ors." It was held that where a law is enacted for the benefit of community as a whole, even in the absence of a provision the statute may be held to be retrospective in nature. However, we are confronted with any such situation here......" 7.4 The Hon'ble Apex Court in the case of CIT v. Essar Teleholdings Ltd. (2018) 401 ITR 445 (SC) considered the judgment of the Hon'ble Apex Court in the case of CIT v. Gold Coins Health Foods (P.) Ltd. (supr....