TaxTMI 
TaxTMI 
2022 (5) TMI 1271
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....cts and circumstances of the case to the extent prejudicial to the interest of the appellant and at any rate is opposed to the principles of equity, natural justice and fair play. 2. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the intimation uls.143(1) of the Assistant Commissioner of Income Tax, Centralized Processing Centre is without jurisdiction and without complying with the due process of law. 3. For that the Commissioner of Income Tax (Appeals) erred in upholding the disallowance of employees' contribution to PF & ESI amounting to Rs.25,16,3101- uls.36(1)(va). 4. For that the Commissioner of Income Tax (Appeals) erred in upholding the disallowance of employees' contribution to PF & ESI for the reason that the payments to the relevant fund were not made within the due date of the relevant statute. 5. For that the Commissioner of Income Tax (Appeals) failed to appreciate that the payment of employees' contribution to PF & ESI within the due date for filing the return of income is an allowable expenditure. 6. For that the Commissioner of Income Tax (Appeals) failed to appreciate that addition cannot be....
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....ective in nature, which is applicable from the AY 2021-22 onwards. Therefore, from the above, it is very clear that the employees' contribution to PF & ESI, is deductible, in case, such payments have been made on or before due date of filing of return of income u/s.139(1) of the Act. 5. The Ld. D.R, on the other hand, supporting the order of the Ld.CIT(A), submitted that the law is amended which is clarificatory in nature and thus, applicable retrospectively and thus, payments made beyond due date specified under the respective Act, is not allowable as deduction u/s.36(1)(va) of the Act and hence, there is no error in the reasons given by the Ld.CIT(A), to sustain the disallowance made by the AO and their orders should be upheld. 6. We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. We find that an identical issue had been considered by the co-ordinate Bench of ITAT Chennai in the case of M/s.Adyar Ananda Bhavan Sweets India Ltd., in ITA Nos.402 & 403/Chny/2021 dated 08.12.2022 and by considering the amendment to the provisions of Sec.36(1)(va) of the Act, by the Finance Act, 2021, held that amendment br....
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....15 is also dismissed." 6.1 Further, we noted that a similar case law of Hon'ble Delhi High Court in the case of CIT vs. Aimil Ltd., (2009) 321 ITR 508 has considered this issue and held in Para 14 to 19 as under:- 14. When we keep that proposition in mind and also take into consideration various judgments where Vinay Cement (supra) is applied and followed, it will not be possible to accept the contention of the Revenue. 15. In CIT v. Dharmendra Sharma, 297 ITR 320, this Court specifically dealt with this issue and relying upon the aforesaid judgment of the Guwahati High Court, as affirmed by the Supreme Court in Vinay Cement (supra), the appeal of the Revenue was dismissed. More detailed discussion is contained in another judgment of this Court in CIT v. P.M. Electronics Ltd. (ITA No. 475/2007 decided on 3.11.2008). Specific questions of law which were proposed by the Revenue in that case were as under :- "(a) Whether amounts paid on account of PF/ESI after due date are allowable in view of Section 43B, read with Section 36(1)(va) of the Act? (b) Whether the deletion of the 2nd proviso to Section 43B by way of amendment by the Finance Ac....
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....Bench of the Guahati High Court and relying on earlier decisions of its own Court in CIT v. Assam Tribune: (2002) 253 ITR 93 and CIT v. Bharat Bamboo and Tiber Suppliers: (1996) 219 ITR 212 the Division Bench dismissed the appeal of the Revenue. It transpires that the aforesaid matter was taken up in appeal alongwith other matters including Vinay Cement (supra). The order in Vinay Cement (supra) was passed by the Supreme Court on 7.3.2007 wherein it observed as follows:- "Delay condoned. In the present case we are concerned with the law as it stood prior to the amendment of Section 43-B. In the circumstances, the assessee was entitled to claim the benefit in Section 43-B for that period particularly in view of the fact that he has contributed to provident fund before filing of the return. Special Leave Petition is dismissed." 10. In view of the above, it is quite evident that the special leave petition was dismissed by a speaking order and while doing so the Supreme Court had noticed the fact that the matter in appeal before it pertain to a period prior to the amendment brought about in Section 43B of the Act. The aforesaid position as regards the state of the law....
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.... We are in respectful agreement with the reasoning of the Madras High Court in Nexus Computer Pvt Ltd (supra). Judicial discipline requires us to follow the view of the Supreme Court in Vinay Cement (supra) as also the view of the Division Bench of this Court in Dharmendra Sharma (supra). 13. In these circumstances, we respectfully disagree with the approach adopted by a Division Bench of the Bombay High Court in M/s Pamwi Tissues Ltd (supra). 14. In these circumstances indicated above, we are of the opinion that no substantial question of law arises for our consideration in the present appeal. The appeal is, thus, dismissed." It also becomes clear that deletion of the 2nd proviso is treated as retrospective in nature and would not apply at all. The case is to be governed with the application of the 1st proviso. 17. We may only add that if the employees‟ contribution is not deposited by the due date prescribed under the relevant Acts and is deposited late, the employer not only pays interest on delayed payment but can incur penalties also, for which specific provisions are made in the Provident Fund Act as well as the ESI Act. Therefore, th....
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....rovisions of ESI Act or any other fund for the welfare of such employees. Section 36 of the Act pertains to the other deductions. Subsection (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 deductions that are admissible under the Act only upon their actual payment. Employer's contribution is covered in clause (b) of secti....
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....dments will take effect from 1st April, 2021 and will accordingly apply to the assessment year 2021-22 and subsequent assessment years. 6.4 In this regard, we have gone through observation of CIT(A), which are recorded in Para 7.17 to 7.19 and the same reads as under:- "7.17 From above observations of the Apex Court, it is clear that if a statute is curative in nature or merely declaratory of the previous law, retrospective operation is generally intended. If the objective of the amendment is to clear the meaning of the principal act, which was already implicit, such amendment will necessarily have retrospective effect because it would be without object unless construed retrospectively. If the amendments in Sec. 36(1)(va) are viewed from this perspective, there will not be any room for doubt about its nature being clarificatory. This matter has been clarified in the amendment i.e. the true import of 'due date 'was very much implicit in the existing explanation 1 of Sec 36(1)(va) even prior to the amendment. More clarity has been. brought about and the existing interpretation is reconfirmed through this amendment by way of insertion of explanation 2. A harmon....
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....ant fund as per the Employee Provident Fund Scheme/ ESI Act, is liable to be added to the income of appellant. 6.5 In view of the above findings of CIT(A), now we have gone through the decision of Hon'ble Supreme Court in the case of CIT vs. Vatika Township Pvt. Ltd., 367 ITR 466, wherein the Hon'ble Supreme Court held that unless contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. The law passed today cannot be applied to the events of the past. The Hon'ble Supreme Court held that if somebody does something today, he do it keeping in view the law of today and in force and not tomorrow's backward adjustment of it. According to Hon'ble Apex court every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset. This principle of law is known as lexprospicit non respicit, which means law looks forward not backward. In the case of Vatika Township Pvt. Ltd., supra, the issue before Hon'ble Supreme Court was the insertion of proviso to section 113 of the act ....
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....ly in the same Finance Act but Finance Acts pertaining to other years where the legislature specifically provided such amendment to be either retrospective or clarificatory. In so far as amendment to Section 113 is concerned, there is no such language used and on the contrary, specific stipulation is added making the provision effective from 1st June, 2002. (e) There is yet another very interesting piece of evidence that clarifies the provision beyond any pale of doubt, viz. understanding of CBDT itself regarding this provision. It is contained in CBDT circular No.8 of 2002 dated 27th August, 2002, with the subject "Finance Act, 2002 - Explanatory Notes on provision relating to Direct Taxes". This circular has been issued after the passing of the Finance Act, 2002, by which amendment to Section 113 was made. In this circular, various amendments to the Income Tax Act are discussed amply demonstrating as to which amendments are clarificatory/retrospective in operation and which amendments are prospective. For example, explanation to Section 158BB is stated to be clarificatory in nature. Likewise, it is mentioned that amendments in Section 145 whereby provisions of that secti....
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....ue: 1. Popular Vehicles & Services (P) Ltd. Vs. CIT [2018] 96 taxmann.com 13 (Kerala), 2. CIT v. Gujarat State Road Transport Corporation [2014] 41 taxmann.com 100 (Gujarat) 3. CIT v. Merchem Ltd. [2015] 378 ITR 443 (Kerala). The CIT(A) himself noted the ambiguity in para 7.4 of his order, which reads as under: 7.4 While rendering above decisions the Hon'ble High Courts had the occasion to examine and distinguish a catena of judgements which are usually relied upon by appellants to advance the proposition that the provisions of section 43B encompass within its scope the employees' Contribution as well and therefore any such contribution though not remitted by the employer within due date specified by the PF/ESI Acts, will still be permissible deduction if the same is actually paid in pursuance of Sec. 43B. The CIT(A) further noted the decisions in favour of assessee in para 7.7, and the same areas under: 1. Alom Extrusions Ltd. (supra); 2. CIT v. Aimil Ltd. [2010] 321 ITR 508/188 Taxman 265 (Delhi); 3. CIT v. NispoPolyfabriks Ltd. [2013] 350 ITR 327/213 Taxman 376/30 taxmann.com 90 (HP); 4. CI....