TaxTMI 
TaxTMI 
2022 (12) TMI 1308
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....ing the claim in respect of belated remittance of Employees' provident fund based on the in section to explanation of seciton36 of the Income-tax Act, 1961 by the Finance Act, 2021. The assessee believes that explanation to sectionm36 by Finance Act, 2021 has prospective effect and not retrospective effect. Hence, the addition of Rs. 4,74,788/- needs to be deleted. 3. The appellant craves leave to add, alter, delete of substitute all or any ground/s of appeal." 2. Admittedly, this appeal is time-barred by 23 days. By virtue of judgment of the Hon'ble Supreme Court in Cognizance for Extension of Limitation, In re 438 ITR 296 (SC) read with judgment in Cognizance for Extension of Limitation, In re 432 ITRM206 (SC) dated 08-03-2021 and 421 ITR 314, the said delay filing the appeal is condoned and the appeal is admitted for disposal on merits 3. The only issue involved in this appeal is the disallowance of employees' contribution to Provident Fund as well as ESIC. It is the case of the assessee that as per various decisions of Pune Tribunal it has been held that if the employees' contribution to provident fund is paid before the due date of filing of return of income, then it....
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....ds the EPF and ESI considering the due date under the relevant Acts and Regulations. Secondly, the A.O ruled by virtue of section 30(1)(va) read with section 2(24)(x) of the Act that such amounts received by the appellant-assessee constitute "income". Those amounts could not have been allowed as deduction u/s 36(1)(va) of the Act when the payment was made beyond the relevant due date under the respective Statutes. In other words, as per the A.O as such amounts were paid beyond the due date as prescribed under the respective Acts the right to claim such amounts as allowable deduction while computing the income was lost for ever. The assessee's plea was unsuccessful before the I.T.A.T. and ultimately the Hon'ble Gujarat High Court also rejected the plea of the assessee. As noticed earlier, on this issue since there was a division of opinion amongst various Hon'ble High Courts, therefore, Hon'ble Supreme Court granted Special Leave to Appeal in all these cases. It was observed and held by the Hon'ble Supreme Court as follows: "51. The analysis of the various judgments cited on behalf of the assessee i.e., Commissioner of Income-Tax v. Aimil Ltd.; Commissioner of Inco....
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....ribution of the employees' share to their credit with the relevant fund is to be treated as deduction (Section 36(1)(va)).The other important feature is that this distinction between the employers "contribution (Section 36(1)(iv)) and employees' contribution required to be deposited by the employer (Section 36(1)(va)) was maintained - and continues to be maintained. On the other hand, Section 43B covers all deductions that are permissible as expenditures, or out-goings forming part of the assessee's liability. These include liabilities such as tax liability, cess duties etc. or interest liability having regard to the terms of the contract. Thus, timely payment of these alone entitle an assessee to the benefit of deduction from the total income. The essential objective of Section 43B is to ensure that if assessees are following the mercantile method of accounting, nevertheless, the deduction of such liabilities, based only on book entries, would not be given. To pass muster, actual payments were a necessary pre-condition for allowing the expenditure. 53. The distinction between an employer's contribution which is its primary liability under law - in terms of Section 36(1)(iv), an....
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....erwise retained, and deemed an income, is treated as a deduction. Thus, it is an essential condition for the deduction that such amounts are deposited on or before the due date. If such interpretation were to be adopted, the non-obstante clause under Section 43B or anything contained in that provision would not absolve the assessee from its liability to deposit the employee's contribution on or before the due date as a condition for deduction. 55. In the light of the above reasoning, this court is of the opinion that there is no infirmity in the approach of the impugned judgment. The decisions of the other High Courts, holding to the contrary, do not lay down the correct law. For these reasons, this court does not find any reason to interfere with the impugned judgment. The appeals are accordingly dismissed." 5. In the aforesaid judgment, the Hon'ble Supreme Court has analysed the legal essence of the welfare legislations such as ESI, EPF, etc. which are primarily for the benefit of the employees. The employees' hard earned money are contributed to these funds whereby their contributions are given to the employers to be deposited as per these enactments. When the money is ....