2021 (12) TMI 692

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....urn of income for AY 2018-19 declaring income of Rs. 1,71,13,360/-. In an intimation dated 19.10.2019 issued u/s.143(1) of the Act, the Centralized Processing Centre (CPC) assessed the assessee total income at Rs. 1,72,78,370/- by making addition a sum of Rs. 1,65,010/- as income representing employees share of contribution to Provident Fund (PF) to the extent not paid on or before the due date as mentioned in Sec 36(1)(va) of the Income Tax Act 1961. 3. The assessee filed appeal before the CIT(A) against the aforesaid addition made to the total income. It was submitted by the assessee that Employee's share of PF contribution has been paid before the due date for filing of return u/s.139(1) of the Act and (this fact is not in dispute) he....

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....rted Explanation 2 to clause (va) of sub-section (1) of the said section, the provisions of section 43B shall not apply and shall be deemed never to have been applied for the purposes of determining the "due date" under the said clause. The CIT(A) also held that Section 43B of the Income-tax Act relates to allowing certain deductions only on actual payments. Clause (b) of the said section provides that any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regular....

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.... the respective PF Act or Scheme will result in negating employer's claim for deduction permanently forever u/s.36(1)(va). On the other hand, delay in payment of employer's contribution is visited with deferment of deduction on payment basis u/s.43B and is therefore not lost totally. This legal distinction between employees' contribution and employer's contribution under the Act was duly recognised by the Courts also. 6. The CIT(A), thereafter held that the amendment to section 36(1)(va) by insertion of explanation 2 and the amendment to section 43B by insertion to explanation 5 by the Finance Bill 2021 was only declaratory / clarificatory in nature and there therefore was applicable with retrospective effect by necessary....