TaxTMI 
TaxTMI 
2022 (3) TMI 148
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....eated unnecessary by the AO. 2. That on the facts and in the circumstances of the case, the ld. CIT(A), NFAC, Delhi has grossly erred in confirming the addition made by the ld. DCIT , CPC, on account of disallowing late deposit of Employees Contribution to ESIC and EPF u/s 2 (24)(x) r.w.s. 36(1)(va) of the I.T. Act, 1961. Even otherwise the claim of the assessee was allowed by ld. CIT(A) Rohtak (Hr.) for A.Y. 2018-19 on similar facts and also allowable u/s 36(1)(va) r.w.s. 43B of the I.T. Act, 1961, in view of binding decision of the Hon'ble Jurisdictional Rajasthan High Court in the cases of CIT vs State Bank of Bikaner & Jaipur reported in 2014, 363 ITR 70 Rajasthan, CIT vs Jaipur Vidhyut Vitran Nigam Limited reported in 2014, 363 ITR 307 Rajasthan and CIT vs Udaipur Dughdh Utpadak Sahkari Sangh Ltd. reported in 2014 366 ITR 163 Rajasthan which may kindly be allowed. 3. That the ld. CIT(A), NFAC, Delhi has erred in law and on facts in holding that the amendments made in the Finance Act, 2021 are retrospective in nature. 4. That the ld. DCIT, CPC is not justified in disallowing due to non-deduction of TDS on interest paid u/s 40(a)(ia) of the I.T. Ac....
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....te as a litigant, are accorded the same treatment and the law is administered in an evenhanded manner. There is no warrant for according a step-motherly treatment when the State is the applicant praying for condonation of delay. "When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have a vested right in injustice being done because of a non-deliberate delay." In this view of the matter, the application of the assessee for condonation of delay in filing the appeal is allowed. 5.1 The Bench further during the course of hearing observed that Ground No. 1 to 3 of the assessee in this appeal of the assessee are regarding disallowance of employee's contribution of PF and ESI deposited belatedly but before due date of filing of return of income U/s 139(1) of the Income Tax Act, 1961 (in short, the Act). 5.2 The assessee filed his return of income on 22.10.2019 which was processed u/s 143(1) of the Act whereby an adjustment was made on account of disallowance of claim of deduction with respect to employees' contribution towards PF and ESIC deposit....
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....ncome to include any sum received by the assessee from his employees as contribution to any provident fund or superannuation fund or any fund set up under the provisions of ESI Act or any other fund for the welfare of such employees. Section 36 of the Act pertains to the other deductions. Sub-section (1) of the said section provides for various deductions allowed while computing the income under the head =Profits and gains of business or profession'.Clause (va) of the said subsection provides for deduction of any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the due date. Explanation to the said clause provides that, for the purposes of this clause, "due date" to mean the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued there-under or under any standing order, award, contract of service or otherwise. Section 43B specifies the list of....
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....see from any of his employees to which provisions of sub-clause (x) of clause (24) of section 2 applies. These amendments will take effect from 1st April, 2021 and will accordingly apply to the assessment year 2021-22 and subsequent assessment years. 5.5. Thus, it is clear that the provision is not retrospective and prospective. Before the Tribunal, the ld. AR of the assessee has submitted that this issue is covered by the various decisions of this Tribunal as well as the Hon'ble Jurisdictional High Courts. 5.6 During the course of hearing the ld.AR of the assessee filed the order of ld. CIT(A) (Rohtak, Haryana) dated 22-07-2020 for the Assessment Year 2018-19 praying that on similar issue the ld. CIT(A) has allowed the appeal of the assessee regarding late payment of ESI & PF u/s 36(1)(a) of the I.T. Act, 1961 by the assssee. 5.7 On the other hand, the ld. DR has submitted that the amendment to Section 36(1)(va) as well as 43B of the Act vide Finance Bill, 2021 is clarificatory in nature and therefore, applicable with retrospective effect. Further, the ld. DR has relied upon the order of the ld. CIT(A) 5.8 We have considered the rival submissions as well as th....
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....case of CIT vs. State Bank of Bikaner & Jaipur wherein the Hon'ble High Court after extensively examining the matter and considering the various decisions of the Hon'ble Supreme Court and various other High Courts has decided the matter in favour of the assessee. In the said decision, the Hon'ble High Court was pleased to held as under: "20. On perusal of Sec.36(1)(va) and Sec.43(B)(b) and analyzing the judgments rendered, in our view as well, it is clear that the legislature brought in the statute Section 43(B)(b) to curb the activities of such tax payers who did not discharge their statutory liability of payment of dues, as aforesaid; and rightly so as on the one hand claim was being made under Section 36 for allowing the deduction of GPF, CPF, ESI etc. as per the system followed by the assessees in claiming the deduction i.e. accrual basis and the same was being allowed, as the liability did exist but the said amount though claimed as a deduction was not being deposited even after lapse of several years. Therefore, to put a check on the said claims/deductions having been made, the said provision was brought in to curb the said activities and which was approved by the Ho....
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.... cannot be disallowed under Section 43B or under Section 36(1)(va) of the IT Act." 16. The said decision has subsequently been followed in CIT vs. Jaipur Vidyut Vitran Nigam Ltd. (supra), CIT vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. (supra), and CIT vs Rajasthan State Beverages Corporation Limited (supra). In all these decisions, it has been consistently held that where the PF and ESI dues are paid after the due date under the respective statues but before filing of the return of income under section 139(1), the same cannot be disallowed under section 43B read with section 36(1)(va) of the Act. 17. We further note that though the ld. CIT(A) has not disputed the various decisions of Hon'ble Rajasthan High Court but has decided to follow the decisions rendered by the Hon'ble Delhi, Madras, Gujarat and Kerala High Courts. Given the divergent views taken by the various High Courts and in the instant case, the fact that the jurisdiction over the Assessing officer lies with the Hon'ble Rajasthan High Court, in our considered view, the ld CIT(A) ought to have considered and followed the decision of the jurisdictional Rajasthan High Court, as evident from series of d....
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....ns to section 43B and 36(1)(va) of the Act by the Finance Act, 2021, has to be construed as retrospective and applicable for the period prior to 01.04.2021 also. On this aspect, we find that the explanatory memorandum to the Finance Act, 2021 proposing amendment in section 36(1)(va) as well as section 43B is applicable only from 01.04.2021. These provisions impose a liability on an assessee and therefore cannot be construed as applicable with retrospective effect unless the legislature specifically says so. In the decisions referred to by us in the earlier paragraph of this order on identical issue the tribunal has taken a view that the aforesaid amendment is applicable only prospectively i.e., from 1.4.2021. We are therefore of the view that the impugned additions made under section 36(1)(va) of the Act in both the Assessment Years deserves to be deleted." 7. In light of the aforesaid discussions and in the entirety of facts and circumstances of the case and following the consistent decisions taken by the various Benches of the Tribunal, the addition by way of adjustment while processing the return of income u/s 143(1) amounting to Rs. 37,62,586/- so made by the CPC towar....