2020 (2) TMI 1619

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.... of the Managing Director of the assessee stating therein the reasons for belated filing of this appeal. On perusal of the reasons stated for belated filing of the appeal, we noticed that no latches can be attributed to the assessee and there is sufficient cause in filing this appeal belatedly. Accordingly, we condone the delay in filing this appeal and proceed to dispose of this appeal on merits. 3. The grounds raised read as follows:- "1. The learned CIT(A) has erred in applying the amendment by Finance Act 2021 to section 36(1)(va) and 43B retrospectively for assessment for A.Y. 2018-19 vide order u/s. 143(1) dated 17.10.2019. 2. The disallowance made in intimation u/s. 143(1) is not covered in any of the permitted a....

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....contribution to PF and ESI having regard to the provisions of section 43B of the I.T. Act. In this context, the assessee relied on the judgment of the Hon'ble jurisdictional High Court in the case of Essae Teraoka Pvt. Ltd. Vs. DCIT, reported in 366 ITR 408 (Kar.). The CIT(A), however, rejected the appeal of the assessee. The CIT(A) noticed the difference between employer and employee contribution to PF and ESI and held that only employers contribution to PF and ESI is entitled to deduction u/s. 43B of the I.T. Act, if the same is paid prior to due date of filing of return of income u/s. 139(1) of the Act. It was further held that the amendment to section 36(1)(va) and 43B of the I.T. Act by Finance Act, 2021 is clarificatory and has go....

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.... Essae Teraoka (P.) Ltd. v. DCIT reported in 366 ITR 408 (Kar.) has categorically held that the assessee would be entitled to deduction of employees' contribution to ESI provided the payment was made prior to the due date of filing of return of income u/s. 139(1) of the I.T. Act. The Hon'ble jurisdictional High Court differed with the judgment of the Hon'ble Gujarat High Court in the case of CIT v. Gujarat State Road Transport Corporation reported in 366 ITR 170 (Guj.). The Hon'ble High Court was considering following substantial question of law:- "Whether in law, the Tribunal was justified in affirming the finding of Assessing Officer in denying the appellant's claim of deductions of the employees contribution ....

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.... 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 ....