TaxTMI 
TaxTMI 
2021 (11) TMI 679
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.... deduction shall be allowed so long as the payment is made within the due date for furnishing return of income under section 139(1) of the Income-tax Act. 4. Without prejudice to the above grounds, the action of the ld.CIT(A) in treating the amendment to section 36(1)(va) and section 43B vide Finance Act, 2021, as retrospective in nature is untenable and unwarranted inasmuch as the same is opposed to various decisions of the Hon'ble Supreme Court on the subject and also on the facts that the Memorandum explaining the provisions in the Finance Bill 2021 issued by the Finance Ministry clearly states that the amendment shall take effect from 1st April, 2021 and shall apply to A.Y. 2021-22 and subsequent Assessment Years. The appellant prays for leave to add, modify delete or introduce additional grounds of appeal at any time before the appeal is disposed off. Based on these and such other grounds that may be adduced from time to time, the appellant requests the honorable Income Tax Appellate Tribunal to consider the petition in the light of principles of justice and cancel the additions made by the Assessing Officer which were confirmed by the Commissioner of Income tax (Appeals....
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....ealth Food Pvt. Ltd., (supra) is distinguishable on facts. It was submitted that the conclusion of the Hon'ble Apex Court in the case of CIT Vs. Gold Coin Health Food Pvt. Ltd., (supra) is based on settled position of law that income includes also loss. It was submitted that it is in this context that the Hon'ble Apex Court held that penalty under section 271(1)(c) of the Act could be imposed even in the case of assessment where the income is determined at loss. Learned AR strongly relied on the larger Bench judgment of the Hon'ble Apex Court in the case of CIT Vs. Vatika Township Pvt. Ltd., reported in 367 ITR 466 wherein it was held that provision for levy of surcharge on income tax in the case of block assessment is not clarificatory and therefore not retrospective in operation. 8. I have heard rival submissions and perused the material on record. On identical facts, the Bangalore Bench of the Tribunal in the case of M/s. Shakuntala Agarbathi Company Vs. DCIT (supra) had held that amendment by Finance Act, 2021, to section 36[1][va] and 43B of the Act is not clarificatory. The relevant finding of the ITAT in the case of M/s. Shakuntala Agarbathi Company Vs. DCIT (supra), reads ....
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.... liable to pay tax on the said amount treating that as his income, deserves to be rejected. 22. With respect, we find it difficult to endorse the view taken by the Gujarat High Court. WE agree with the view taken by this Court in W.A.No.4077/2013. 23. In the result, the appeal is allowed and the substantial question of law framed by us is answered in favour of the appellant-assessee and against the respondent-revenue. There shall be no order as to costs." 7.2 The further question is whether the amendment to section 36[1][va] and 43B of the Act by Finance Act, 2021 is clarificatory and declaratory in nature. The Hon'ble Supreme Court in the recent judgment in the case of M.M.Aqua Technologies Limited v. CIT reported in (2021) 436 ITR 582 (SC) had held that retrospective provision in a taxing Act which is "for the removal of doubts" cannot be presumed to be retrospective, if it alters or changes the law as it earlier stood (page 597). In this case, in view of the judgment of the Hon'ble jurisdictional High Court in the case of Essae Teraoka (P.) Ltd. v. DCIT (supra) the assessee would have been entitled to deduction of employees' contribution to ESI, if the payment ....
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....s were made by the Finance Act, 2002, to Section 271(1)(iii) of the Act by incorporating the expression "if any" and also in Explanation 4 setting out the meaning of the phrase "amount of tax sought to be evaded". The Hon'ble Apex Court in the case of CIT Vs. Gold Coin Health Food [P] Ltd., [2008] 304 ITR 308 [SC], held that the Parliament clarified the position by using the expression "if any", which was not a substantive amendment creating penalty for the first time. It was held that income always included loss and even the unamended provisions would have to be interpreted in the manner that right from 01.06.1976 penalty would have been leviable. Hence, the Hon'ble Apex Court went on to hold that the amendment is clarificatory in nature and hence will apply for the period before 01.04.2003. The relevant observations of the Hon'ble Apex Court reads as follows :- "6. It would be of some relevance to take note of what this Court said in Virtual's case (supra). Pointing out one of the important tests at para 51 it was observed that even if the statute does contain a statement to the effect that the amendment is clarificatory or declaratory, that is not the end of th....
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....vaded can, at times, lead to anomalies. We would recommend that, in cases where the concealed income is to be, set off against Losses incurred by an assessee under other heads of income or against losses brought forward from earlier years, and the total income thus, gets reduced to a figure smaller than the concealed income or even to a minus figure, the tax sought to be evaded should be calculated as if the concealed income were the total income." 9. Reference to the Department Circular No.204 dated 24.7.1976 reported in 1977 (110) ITR 21 (St.) has also substantial relevance. Same reads as follows: "New Explanation 4 defines 'the amount of tax sought to be evaded'. According to the definition, this expression will ordinarily mean the difference between the tax on the total income assessed and the tax that would have been chargeable had such total income been reduced by the amount of income in respect of which particulars have been concealed. In a case, however, where on setting off the concealed income against any loss incurred by the assessee under other head of income or brought forward from earlier years, the' total income is reduced to a figure Lower than the c....
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....endment cannot be a ground to hold that earlier no penalty could be levied. However, the position in this case quite different as the Hon'ble jurisdictional High Court in the case of Essae Teraoka [P] Ltd., Vs. DCIT, reported in [2014] 366 ITR 408 [Kar] has considered the concept of 'due date' as appearing in 36[1][va] and section 43B of the Act and has taken the view that the assessee is entitled to the relief having regard to the use of the expression "contribution" under the Provident Fund Act. Now it has been provided that the due date in section 43B is of no consequence to judge the applicability of provisions of section 36[1][va]of the Act and that too with effect from 01.04.2021. In other words, there is sufficient intrinsic evidence to show that these amendments are not clarificatory in nature and the mere use of the expression "it is clarified" cannot be determinative of the nature of the amendment made. Furthermore, in the present case, Legislature has expressly given only prospective effect to these Explanations as is evident from the Memorandum Explaining the Provisions in the Finance Bill, 2021, by stating that the said amendment i.e., the insertion of anot....
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....d not backward. As was observed in Phillips vs. Eyre', a retrospective legislation is contrary to the general principle that legislation by which the conduct of mankind is to be regulated when introduced for the first time to deal with future acts ought not to change the character of past transactions carried on upon the faith of the then existing law. 32. The obvious basis of the principle against retrospectivity is the principle of fairness, which must be the basis of every legal rule as was observed in the decision reported in L 'Office Cherifien des Phosphates v. Yamashita-Shinnihon Steamship Co. Ltd. Thus, legislations which modified accrued rights or which impose obligations or impose new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect; unless the legislation. is for purpose of supplying an obvious omission in a former legislation or to explain a former legislation. We need not note the cornucopia of case law available on the subject because aforesaid legal position clearly emerges from the various decisions and this legal position was conceded by the counsel fo....
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....ment of the Hon'ble Apex Court in the case of CIT v. Gold Coins Health Foods (P.) Ltd. (supra) and also the judgment of the Larger Bench of the Hon'ble Apex Court in the case of CIT v. Vatika Township P. Ltd. (supra). The Hon'ble Apex Court in the case of CIT v. Essar Teleholdings Ltd. (supra), held that judgment in the case of CIT v. Gold Coins Health Foods (P.) Ltd. (supra) is distinguishable and not applicable for the reason that Parliament clarified the position of law by changing the expression `any' by `if any' which was not a substantive amendment creating penalty for the first time. The Hon'ble Supreme Court followed the judgment in the case of CIT v. Vatika Township P. Ltd. (supra) and held that Rule 8D of the I.T.Rules does not apply retrospectively. For the aforesaid reason and the judicial pronouncements, cited supra, I hold that the judgment of the Hon'ble Apex Court relied on by the CIT(A) in the case of CIT v. Cold Coins Health Foods (P.) Ltd. (supra) does not have application to the present case. 8.5 The learned Standing Counsel had submitted that the A.O. may be directed to follow the outcome of the judgment of the Hon'ble Apex Court in....