TaxTMI 
TaxTMI 
TaxTMI 
2022 (4) TMI 1541
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....the assessee regarding employees contribution to the PF & ESI, has found that the employees contribution has been deposited by the assessee to PF&ESI beyond the due date as prescribed under the relevant Act. However, the CIT(A) has not disputed that the fact that the assessee has paid the employees contribution to PF & ESI before the due date of fling of the return u/s.139(1) of the Act. The ld. CIT-DR also did not controvert to the above fact before us, however, he relied on the orders of the authorities below along with the amendment brought to the Finance Bill, 2021. The assessment year under consideration is A.Y.2017-2018, therefore, the amendment brought into the Finance Bill, 2021 is not applicable to the assessment year under consideration. This issue has also been settled by the coordinate bench of the Tribunal in the case of Rukmani Infra Projects Ltd., ITA No. 358/CTK/2017, order dated 30.03.2022, wherein the Tribunal considering plethora of judicial decisions as well as the amendment brought to the Finance Bill, 2021, has deleted the addition made on account of delay in deposit of employees contribution to PF and ESI after observing as under:- 7.9 To decide the ab....
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....t the provisions of the said section do not apply and deemed to never have been applied to a sum received by the assessee 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. [Clauses 8 and 9] 7.10 After this amendment, several decisions by the coordinate benches of ITAT at various locations are pronounced on this issue, brief synopsis and finding on the issue are as under: i) Jagmohan Singh Vs DCIT (ITAT Chandigarh), Appeal Number: ITA Nos. 185 & 193/Chd/2021, Date of Judgement/Order: 15/12/2021 HELD THAT:- It is not in dispute that employees" contribution to ESI and PF collected by the assessee from its employees had been deposited well before the due date of filing of return of income u/s 139 (1) of the Act. We find that the issue is squarely covered by the decisions of the Hon'ble Rajasthan High Court, Hon'ble Himachal Pradesh High Court as well as Hon'ble Punjab & Haryana High Court. We further note that though the Id. CIT(A) has not disputed the various decisions of Hon'b....
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....ct, the same is allowable as deduction as per the provisions of Section 2(24)(x) r.w.s. 36(1)(va) r.w.s. 43B. As before insertion of Explanation 2 to Section 36(1)(va) of the Act, there is ambiguity regarding due date of payment of employees" contribution on account of provident fund and ESI, whether the due date is as per the respective acts or up to the due date of filing of return of income of the assessee. As noted by Hon'ble Supreme Court an amendment made to a taxing statute can be said to be intended to remove hardship only of the assessee and not of the Department. Imposing of a retrospective levy on the assessee would be caused undue hardship and for that reason Parliament specifically chose to make the proviso affective from a particular date. In the present case also, the amendment brought out by Finance Act, 2021 w.e.f. 01.04.2021 i.e. for and from assessment year 2021-22 of Explanation-2 to s. 36(1)(va) of the Act and not retrospectively. Thus, from the above, it is clear that the amendment brought in the statute i.e., by Finance Act, 2021, the provisions of Section 36(1)(va) r.w.s. 43B of the Act amended by inserting Explanation 2 is prospective and not retrospective.....
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....erefore we hold that no disallowance u/s. 36(1)(v) r.w.s. Section 2(24)(x) can be made in the instant case - Decided in favour of assessee. vi) Lumino Industries Ltd. Vs. ACIT, ITA Nos.231&365/Kol/2021, order dated 17/11/2021; 17. Have heard both the parties. We note that the Finance Bill, 2021 has brought in an amendment which disallows the employees" contribution made in PF and ESI if not made within the due date as prescribed by the respective statutes (PF and ESI Act). So after the amendment has been inserted according to Shri Miraj D Shah takes effect from 1st April, 2021 i.e AY 2021-22 and subsequent assessment year and if the remittance of PF/ESI Employees" Contribution is not made within the time prescribed by the PF/ESI Act then the remittance cannot be allowed as a deduction which is prospective in operation. Whereas according to Ld. CIT(A), the amendment brought in is clarificatory in nature so, retrospective in operation. So we have to adjudicate this issue whether the amendment brought in by Finance Act, 2021 is prospective or retrospective in operation. We note that before this amendment has been inserted by Finance Bill, 2021, the Hon'ble Jurisdictional Calcutt....
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....es and the relevant clauses 8 & 9 of the Finance Bill, 2021 (supra) pertaining to the issue in hand which in clear and unambiguous terms spells out the intention of Parliament that the amendment shall take effect from 1st April, 2021 and therefore will accordingly apply to Assessment Year 2021-22 and subsequent years. So since the legislative intent is clear, the amendment brought in by Finance Act, 2021 on this issue as discussed is prospective and Ld. CIT(A) erred in holding otherwise. So till AY 2021-22, the Jurisdictional High Court's view in favor of assessee will hold good and is binding on us. As discussed the decision of the Hon'ble Delhi High Court in Bharat Hotels Ltd. (supra) which was in favor of revenue has not considered the decision of the Co-ordinate Division Bench decision in M/s Aimil Ltd.(supra) which is in favour of assessee. So we note that later decision of the Delhi/Hyderabad Tribunal have followed the decision favouring assessee in the light of the Hon'ble Supreme Court decision in M/s Vegetable Products (supra). In the light of the aforesaid decision and relying on the ratio of the Hon'ble Supreme Court in the case of Vatika Township Pvt. Ltd. (supra) and M....
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...., ITA No .1853/Del/2020, order dated 13/10/2021; xx) Express Roadway P. Ltd. Vs. ACIT, ITA No. 5570/Del/2017, order dated 11/10/2021; xxi) Ridhi Sidhi Mills (India) Pvt. Ltd. Vs. DCIT, ITA Nos .71&72/Jodh/2021, order dated 28/09/2021; xxii) Chodavaram Vs. ADIT, ITA No. 25&28/VIZ/2021, order dated 23/09/2021; xxiii) S.V.Engineering Constructions India (P) Ltd. Vs. DCIT, ITA No. 130/VIZ/2021, order dated 23/09/2021. 7.12 Moreover, it would be significant to refer to the SLP by the revenue filed before the Hon'ble Apex Court in the case of M/s Rajasthan State Beverages Corporation Ltd., reported on 84 Taxman.com 185 [04.07.2017] wherein the SLP of revenue arising out of the order passed by the Hon'ble Rajasthan High Court in the case of M/s Rajasthan State Beverages Corporation Ltd., in ITA No. 150/2016, order dated 04.08.2016, is dismissed by the Hon'ble Apex Court. Held That : Amount claimed on payment of PF and ESI having been deposited on or before due date of filing of returns, same could not be disallowed under section 43B or under section 36(1)(va); SLP dismissed. 7.13 On perusal of the above judgments in favour of the assessee and other quoted by the Ld ....
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.... the effective date (01.04.2021, AY 2021-22 onwards) of the amended provision by Finance Bill 2021. Accordingly, in view of various judgments in the favour of assessee, disallowance could not be made in respect of PF/ESI paid within the due date of filing return of income. Therefore, it is directed to delete the disallowance made for delayed remittance of employee's contribution to EPF for Rs.59,30,423/-, consequently, the appeal of the assessee is allowed to this extent. 4. In addition to the observation of the coordinate bench in the above matter, reliance can also be placed on the following decisions :- 1. [2022] 136 taxmann.com 244 (Delhi - Trib.), IN THE ITAT DELHI BENCH 'G', Raj Kumar v. ITD, CPC, Bengaluru, IT APPEAL NOS. 1392, 1383 & 1384(DELHI) OF 2021 & ORS. [ASSESSMENT YEAR 2019-20], FEBRUARY 28, 2022, wherein it is held that:- INCOME TAX : FA 2021 amendments regarding due date of deposit of employee's contribution to PF/ESI, are prospective w.e.f. AY 2021-22 * For AYs prior to 2021-22, deduction of employee's contribution to PF/ESI is to be allowed if same is paid on or before due date of filing ITR * For assessment years prior to Assessment....
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....B effected by Finance Act, 2021 were applicable prospectively in relation to Assessment Year 2021- 22 and subsequent years. Therefore, the claim of deduction of contribution to Employee's State Insurance Scheme (ESI) and Provident Fund u/s. 36(1)(va) could not be denied to the assessee in Assessment Year 2017-18 in question on the basis of amendments made by Finance Act, 2021. For this proposition, we find support from the decision of the Coordinate Bench of Tribunal in the case of The Continental Restaurant and Café Company v. ITO [2021] 91 ITR (Trib.)(S.N.) 60 (Bang.) and Adyar Ananda Bhavan Sweets India (P.) Ltd. v. ACIT [2022] 134 taxmann.com 56 (Chennai - Trib.). Consequently, the action of revenue on this score is set aside and cancelled. 10. In the result, the appeal of the assessee is allowed. 3. [2022] 136 taxmann.com 147 (Jabalpur-Trib) IN THE ITAT, JABALPUR BENCH Haylide Chemicals (P.) Ltd. v. Deputy Commissioner of Income-tax* IT APPEAL NO. 51 (JAB) OF 2021 [ASSESSMENT YEAR 2017-18] JANUARY 13, 2022, wherein it is held that :- Section 43B, read with sections 36(1)(va) and 139, of the Income-tax Act, 1961 - Business disallowance - Certain deductions t....
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....deposition of same by assessee as per Explanation to section 36(1)(va) - Whether no disallowance could be made for assessment years prior to assessment year 2021-22 as per amendment to section 36(1)(va) brought by Finance Act, 2021 which came into effect from 1-4-2021 as same has no retrospective applicability - Held, yes - Whether therefore, addition made by way of adjustment towards deposit of employees' contribution towards ESI and PF paid before due date of filing of return of income under section 139(1) was to be deleted - Held, yes [Para 6] [In favour of assessee] 5. We have also gone through the observation of the Agra Bench of the Tribunal in a recent case in the case of Agra Karam Udhog, Agra vs J.A.O., Dy. CIT, dated 22 March, 2022 ITA No. 62/Agr/2021 AND OTHERS. In all the above case a similar view has been taken by distinguished benches of the Tribunal that disallowance on account of delayed payment of ESI and PF under relevant statute, but remitted before due date of filing of return of income under section 139(1) can not be made, hence decided in favour of assessee. 6. Now, to decide the applicability of the amendment in section 36(i)(a) and 43B, whether an ame....
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....loyees is actually paid by the assessee on or before the due date for furnishing the return of the income under sub-section (1) of section 139, assessee would be entitled to deduction under section 43B and such deduction would be admissible for the accounting year. This provision does not cover employee contribution referred to in clause (va) of sub-section (1) of section 36 of the Act. Though 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 employer 40 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 ....