AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (6) TMI 560
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....t which petition under section 154 of the Act was moved, and which petition in spite of being moved in time was not decided, the appeal filed thereafter, the assessee was prevented by sufficient and reasonable cause, the action of the CIT(A) in dismissing the appeal on account of delay is totally unjustified and unwarranted. 3. Because the CIT(A) should ought to have considered the facts that the delay in filing the appeal was purely on account of the delay in non disposal of the petition moved under section 154 of the Act, there being no deliberate intention, the delay being beyond the control of the assessee, the CIT(A) was not justified in not condoning the delay, if any. 4. Because the CIT(A) has failed to consider that the period from March 23, 2020 to October 31, 2021 was covered by COVID-19, during which period the limitation was extended, delay in filing the appeal if any had to be condoned, the appeal being in time, the order of the CIT(A) be quashed. 5. Because the CIT(A) has erred on facts and in law in not deciding the appeal on merits of the disallowance/addition of Rs. 15,99,983/- in respect of delayed payment of EPF and ESIC which being allowable expenditure, s....
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....3. Learned D. R. even though relied on the orders of the authorities below but did not disagree that the issue is not covered in favour of the assessee by the order of Lucknow Bench of the Tribunal. However, he submitted that since learned CIT(A) has not decided the issue on merits, the matter should go back to him to decide the issue afresh on merits. 4. Learned counsel for the assessee, in his rejoinder relied on the judgment of Hon'ble Madras High Court in the case of Commissioner of Wealth-Tax vs. M.K.S. Vanavarayar [1980] 122 ITR 184 (Mad) and submitted that where necessary facts for disposal of the appeals on merits are available before the Tribunal, the Tribunal, on the basis of such materials already available, can satisfactorily dispose of the appeals on merits and it cannot be contended that as a matter of law the Tribunal should remand back the appeals to the CIT(A) for his adjudication. It was submitted that this Bench has decided similar issue in a number of cases therefore it was prayed that the issue may be decided here itself. 4. I have heard the rival parties and have gone through the material placed on record. These appeals have been dismissed by learned CIT....
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....A) also dismissed the appeal by holding that no mistake is apparent from record. For Assessment Year 2019-20 the assessee had preferred appeal against the order passed by CPC u/s. 143(1) of the Act. I find that the issue involved in these files is duly covered in favour of the assessee by the order of SMC Bench of Lucknow Tribunal in the case of S.K. Shoes and Boots Private Limited, I.T.A. No. 110/Lkw/2021, order dated 08/03/2022 and in the case of Sangrila Nutri Food Products, I.T.A. No. 99/Lkw/2021, order dated 08/03/2022. While dealing with the similar issue, the Tribunal in I.T.A. No. 99/Lkw/2021, vide para 4 to 6 has held as under: "4. I have heard the rival parties and have gone through the material placed on record. I find that the only issue involved in this appeal is the action of learned CIT(A) by which he has upheld the addition made by CPC regarding employees' contribution towards ESI and PF. There is no dispute between the parties regarding the dates of deposit of ESI and PF which clearly are beyond the prescribed date of deposit as applicable under the respective acts. However, there is no dispute between the parties that these deposits were made before the fili....
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....same and deleted disallowance of Rs. 24,89,41,130/(short fall in employees contribution to provident fund) and Rs. 1,93,55,580/(short fall in employers contribution to provident fund) observing that employees contribution/employers contribution was deposited before filing Return under Section 139 of Act 1961 for the relevant period. Revenue, in its turn, preferred appeal before Tribunal. Relying on judgment in Commissioner of Income Tax Vs Alom Extrusions Ltd. (supra), Tribunal dismissed appeal and confirmed order passed by CIT(A). That is how matter came before High Court in appeal. Court considered following question, posed in para 7.01, reads as under: "Short question which is posed for consideration of this court is with respect to the disallowance of the amount being the employees' contribution to the PF account/ESI contribution which admittedly which the concerned assessee did not deposit with the PF Department/ESI Department within due date under the PF Act and/or the ESI Act." 18. Gujrat High Court referred to Section 2(24)(x) and found that any sum received by Assessee (employer) from his employees as contributions to any provident fund or superannuation fund or an....
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....l dispute relates to employers' contribution and whether amendment in Section 43B by Finance Act, 2003 would operate retrospective or not, Supreme Court had no occasion to consider deduction with reference to Section 36(1)(va). For the same reason Gujrat High Court dissented with the judgments of Rajasthan High Court in Commissioner of Income Tax Vs Udaipur Dugdh Utpadak Sahakari Sangh Ltd., (2014) 366 ITR 163, Punjab & Haryana High Court in Commissioner of Income Tax Vs Hemla Embroidery Mills P. Ltd., (2014) 366 ITR 167, Himachal Pradesh High Court in Commissioner of Income Tax Vs Nipso Polyfabriks Ltd., (2013) 350 ITR 327 and Karnataka High Court in Commissioner of Income Tax Vs Sabri Enterprises, (2008) 298 ITR 141. 21. Karnataka High Court had an occasion to consider, whether it should dissent with the view taken in the earlier judgments and follow the view taken by Gujrat High Court in Commissioner of Income Tax Vs Gujrat State Road Transport Corporation (supra) and this occasion came in Essae Teraoka P. Ltd. Vs Deputy Commissioner of Income Tax, (2014) 366 ITR 408. Dispute relates to A.Y. 2008-09. Assessee filed Return on 26.09.2008. Return was processed under Section 1....
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....on" used in clause (b) of Section 43B of Act 1961 means the contribution of employer and employee, both, and that being so, if contribution is deposited on or before due date for furnishing Return of income under sub-section (1) of Section 139 of Act 1961, employer is entitled for deduction. 23. Though in a short judgment, but Punjab & Haryana High Court in Commissioner of Income Tax Vs Hemla Embroidery Mills (P.) Ltd., (supra) not only followed Commissioner of Income Tax Vs Alom Extrusions Ltd. (supra) but also its own earlier judgment in Commissioner of Income Tax Vs Rai Agro Industries Ltd., (2011) 334 ITR 122, to hold that Section 43B shall apply to both 'contributions' i.e. employers' and employees'. 24. Kerala High Court in recent judgment in Commissioner of Income Tax Vs Merchem Ltd., (2015) 378 ITR 443, has followed the decision of Gujrat High Court in Commissioner of Income Tax Vs Gujrat State Road Transport Corporation (supra) and dissented with the otherwise judgments of Rajasthan High Court in Commissioner of Income Tax Vs State Bank of Bikaner and Jaipur, (2014) 363 ITR 70, Karnataka High Court in Commissioner of Income Tax Vs Spectrum Consultants I....
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..... 01.04.1989. 27. Court held that Assessee/employer thus would be entitled to deduction only if contribution stands credited on or before due date given in the Act 1952 or Act 1948. Second proviso created difficulties, inasmuch as under Act, 1981, due date was after the date of filing of returns and thus industries made representations to the Ministry of Finance. Court, looking to the history of amendments held, it is evident that Section 43B, when enacted in 1984, commences with a non obstante clause. The underlying object being to disallow deductions claimed merely by making a book entry based on the mercantile system of accounting. At the same time, Section 43B made it mandatory for the Department to grant deduction in computing income under Section 28 in the year in which tax, duty, cess etc. is actually paid. Parliament took cognizance of the fact that accounting year of a company did not always tally with the due dates under Provident Fund Act, Municipal Corporation Act (Octroi) and other Tax laws. Therefore, by way of First Proviso, an incentive/relaxation was sought to be given in respect of tax, duty, cess or fee by explicitly stating that if such tax duty cess or fee is....
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....rubala International Pvt. Ltd. vs. DCIT in I.T.A. No. 726/Lkw/2016, vide order dated 17/05/2018, has followed the judgment in the case of Sagun Foundry (supra) and again vide order dated 31/07/2019, the Lucknow Bench of the Tribunal in the case of Axis Motors Pvt. Ltd. vs. DCIT in I.T.A. No. 289/Lkw/2019 has again followed the same judgment of Hon'ble High Court. The Allahabad Bench of the Tribunal, in the case of JCIT, Circle-2, Allahabad vs. Bharat Pumps and Compressors Ltd. in I.T.A. No. 147 & 148/Alld/2016, after taking into account the amendment brought out by Finance Act, 2021, has again decided the issue in favour of the assessee by holding the amendment to be applicable from April 2021 only. The findings of the Tribunal are reproduced below: "There is a recent amendment to Section 36(1)(va) by Finance Act, 2021, wherein Explanation 2 was inserted, which reads as under: "36(1)(va) .............. ................................. Explanation 2- For the removal of doubts, it is hereby clarified that the provisions of section 43B shall not apply and shall be deemed never to have been applied for the purposes of determining the 'due date' under this clause;" ....
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....m 01st April, 2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years. It is also to be noted that several of the tax-payers (except in the State of Gujarat and Kerala, and such other States where Hon'ble jurisdictional High Court has decided this issue in favour of Revenue) situated in the States where Hon'ble Jurisdictional High Court has decided this issue in favour of tax-payers, have already been allowed the deduction towards employee contribution received by employer which was deposited late by employer beyond the time stipulated u/s. 36(1)(va), but before the due date as prescribed for filing of return of income u/s. 139(1) of the 1961 Act, and there cannot be a class different now at this stage where the deduction is to be denied on the ground of strict interpretation of the provisions of Section 36(1)(va), unless the amendment made by Finance Act, 2021 is made specifically applicable retrospectively from the date of insertion of the provision or any other specified earlier date in the Finance Act, rather on the other hand, the Memorandum to Finance Bill, 2021 has specifically made this amendment applicable from 01.04.2021 and spec....
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....hough section 43B of the Act covers only employer's contribution and does not cover employee contribution, some courts have applied the provision of section 43B on employee contribution as well. There is a distinction between contribution and employee's contribution towards welfare fund. It may be noted that employee's contribution towards welfare funds is a mechanism to ensure the compliance by the employers of the labour welfare laws. Hence, it needs to be stressed that the employer's contribution towards welfare funds such as ESI and PF needs to be clearly distinguished from the employee's contribution towards welfare funds. Employee's contribution is employee own money and the employer deposits this contribution on behalf of the employee in fiduciary capacity. By late deposit of employee contribution, the employers get unjustly enriched by keeping the money belonging to the employees. Clause (va) of sub-section (1) of Section 36 of the Act was inserted to the Act vide Finance Act 1987 as a measures of penalizing employers who mis-utilize employee's contributions. Accordingly, in order to provide certainty, it is proposed to- (1) amend clause (va)....