TaxTMI 
TaxTMI 
TaxTMI 
2022 (6) TMI 95
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....2. That the NFAC has erred in confirming the disallowance made by the AO CPC under section 36(1)(va) of the act of Rs. 14,90,835/- on account of delay in deposit of employee's contribution towards PF/ESI without considering the fact that such amount was duly deposited on or before due date of filing return under section 139(1) of the act and thereby disregarding the judicial pronouncements of the apex court and jurisdictional high court. 3. That the NFAC has erred in confirming the disallowance made by AO CPC under section 36(1)(va) of the act of Rs. 14,90,835/- on account of delay in deposit of employee's contribution towards PF/ESI without considering the correct interpretation and application of latest law in this regard. 4. That the NFAC grossly erred in placing reliance on amended provisions of section 36(1)(va) and section 43B as per the Finance Act, 2021 and applying these amended provisions retrospectively for sustaining disallowance made by AO CPC under section 36(1)(va) of the act of Rs.14,90,835/- on account of delay in deposit of employee's contribution towards PF/ESI 5. That the NFAC erred in confirming the disallowance under section 36(1)(va) of the a....
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....would also be covered under section 43B of the Act and therefore if the share of the employee's share of contribution is made on or before due date for furnishing the return of income under section 139(1) of the Act, then the assessee would be entitled to claim deduction. Therefore, the issue is covered by the decision of the Hon'ble Karnataka High Court. The next aspect to be considered is whether the amendment to the provisions 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 impu....
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....is Hon'ble Supreme Court held as under:- "Notes on Clauses" appended to Finance Bill, 2002 while proposing insertion of proviso categorically states that "this amendment will take effect from 1st June, 2002". These become epigraphic words, when seen in contradistinction to other amendments specifically stating those to be clarificatory or retrospectively depicting clear intention of the legislature. It can be seen from the same notes that few other amendments in the Income Tax Act were made by the same Finance Act specifically making those amendments retrospectively. For example, clause 40 seeks to amend S.92F. Clause iii (a) of S.92F is amended "so as to clarify that the activities mentioned in the said clause include the carrying out of any work in pursuance of a contract." This amendment takes effect retrospectively from 01.04.2002. Various other amendments also take place retrospectively. The Notes on Clauses show that the legislature is fully aware of 3 concepts: (i) prospective amendment with effect from a fixed date; (ii) retrospective amendment with effect from a fixed anterior date; and (iii) clarificatory amendments which are retrospective in nature. Thus, ....
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....ided in Paragraph A, B, C, D or E, as the case may be, of Part III of the First Schedule of the Finance Act of the year in which the search is initiated under section 132 or requisition is made under section 132A of the income-tax Act." Addition of this proviso in the Finance Act, 2003 further makes it clear that such a provision was necessary to provide for surcharge in the cases of block assessments and thereby making it prospective in nature. The charge in respect of the surcharge, having been created for the first time by the insertion of the proviso to Section 113, is clearly a substantive provision and hence is to be construed prospective in operation. The amendment neither purports to be merely clarificatory nor is there any material to suggest that it was intended by Parliament. Furthermore, an amendment made to a taxing statute can be said to be intended to remove 'hardships' only of the assessee, not of the Department. On the contrary, imposing a retrospective levy on the assessee would have caused undue hardship and for that reason Parliament specifically chose to make the proviso effective from June 1, 2002. 6.7 We noted from the judgment of Hon'ble Suprem....