2021 (12) TMI 942

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....for the Assessment Year (AY) 2018-19 vide order dated 08/4/2019. 2. At the very outset, it was submitted by the ld. counsel for the assessee, Sh. Kumar, that the only issue arising in the instant appeal is the addition of the employee's contribution to the employee welfare funds for the reason of the same having been deposited beyond the due date specified in its respect u/s. 36(1)(va), even as the same stand deposited by the due date of filing the return of income u/s/. 139(1) of the Act for the relevant year. The addition, being debatable, could have been made under section 154, even as clarified by the Tribunal per its recent decision in Nikhil Mohine v. Dy. CIT (in ITA Nos. 37 & 38/Jab/2021, dated 18.11.2021/PB pg. 17), on which decisi....

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....vered by s. 43B(b), implying, in context, u/s. 37(1) r/w s. 43B(b), which were aplenty (see PB pgs. 18-35), it opined, could be validated only by disregarding the clear language of the relevant provisions, upheld constitutionally and not read down. The said decisions must nevertheless be respected, and no adjustment contrary thereto could be made u/ss. 143(1) or 154; there being no decision by the Hon'ble jurisdictional High Court in the matter. The only manner, therefore, available for the Revenue to effect an adjustment u/s. 143(1)/154, is where the Explanations to section 36(1)(va) and s. 43B(b) inserted by Finance Act, 2021, which attempt to resolve the issue of the employee's contribution to the employee welfare funds being governe....

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....so examined by the Tribunal on merits, i.e., for the said limited purpose, to find that the view canvassed by or on the assessee's behalf could be sustained only by ignoring the existence of s. 36(1)(va) - which governs the deductibility of the employees' contribution to the employee welfare funds, on the statutebook - clearly, an impermissibility. Another fundamental infirmity in the assessee's argument is in regarding the employee's contribution, deemed by the legal fiction of s. 2(24)(x) as the assessee-employer's income, as an expense deductible u/s. 37(1), which could be so only where it is not recoverable - an impossibility, as the said deeming applied only on receipt thereof, again bringing s. 36(1)(va) into play for its deduction, a....

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....ive. 3.2 The said Explanations, the Tribunal continued, had however been, as clear from a reference to the Notes on the Clauses to, and the Memorandum explaining the Provisions of, the Finance Bill, 2021, reproducing the same, proposed as prospective amendments. The amendments by way of Explanation 5 to s. 43B and Explanation 2 to s. 36(1)(va), it concluded, are to therefore take effect only from AY 2021-22, and which view is unmistakable on a plain reading of the said documents. Decision 4.1 The view recorded in the impugned order on the merits of the additions - even as the same agrees with that expressed by the Tribunal in Nikhil Mohine (supra)(see para 3.1 of this order), is of little consequence in view of the limited scope of an am....