TaxTMI 
TaxTMI 
2024 (1) TMI 1330
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Rationalisation of various Provisions "Payment employer of employee contribution to a fund on or Before due date Clause (24) of section 2 of the Act provides an inclusive definition of the income. Sub-clause (x) to the said clause provide that income to include any Sum received by the assessee from his employees as contribution to any provident fund or superannuation fund or any fund set up under the Provisions of ESI Act or any other fund for the welfare of such employees. Section 36 of the Act pertains to the other deductions, Sub-section (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 sub-section 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 r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....have been applied for the purposes of determining the "due date" under this clause; and (ii) amend section 438 of the Act by inserting Explanation 5 to the said section to clarify that 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." 5. In the case of the assessee it is not disputed that the employee's contribution of Rs. 14,04,162/- was deducted by the assessee and remitted in the Government Treasury with in the due date of filing the return of income under the Income Tax Act, 1961. Since the case of the assessee relates to assessment year 2019-20 and the amendment though clarificatory in nature has come into effect from 1/4/2021, for the relevant year under consideration it would suffice that the employee's contribution deducted by the assessee is remitted in the Government Treasury within the due date of filing of the return of income as pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "Any sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set up under the Provisions of the Employees' State Insurance Act, 1948 (34 of 1948), or any other fund for the welfare of such employees". The Act is unambiguously clear that such contributions are allowed as a deduction u/s 36(1)(va) only if the employer credits the same to the employees account in the relevant provident fund before the due date under the relevant Provident fund Act. However, some High Courts have allowed such deductions even if paid after the due date under the relevant Act but if paid before the filing of Income Tax Return. These Hon'ble High Courts have held that the provision of section 43B shall apply to the provision of section 36(1)(va) that is, such deductions shall be allowed on actual payment. The rationale in these decisions is that both the employees and employers contribution are covered u/s 438. The following decisions are in support of this view - 1. CIT Jaipur vis Mis Rajasthan state Beverages Com. Ltd. D.B. Income Tax Appeal No/SO/2016(Raj) 2. CIT vis. Ghatge Patel Transport Ltd Income T....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is now clear i.e., employees' contribution to specific fund and ESI will not be allowed as deduction if there is delay in deposit even by a single day as per the due dates mentioned in the respective legislation. The language and rationale for these amendments clearly indicate that these amendments are retrospective in nature, The amendment to section 36(1)(va) specifically states that explanation 2 to the said clause has been inserted to clarify that the provision of section 43B does not apply and deemed to never have been applied for the purpose of determining the due date. Similarly, section 43B has been amended by inserting explanation 5 to the said section to clarify that the provision of the section does not apply and deemed to never have been applied to any sum to which the provision of sub-clause(x) of clause (24) of section 2 applies. The words "deemed to never have been applied" clarifies all doubt about the nature of the amendments. They are retrospective in nature. The memorandum to the finance bill 'clarifies that the amendment was introduced to protect the interest of the employees and ensure that the employers do not unjustly get enriched by their contribut....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Thus, the Hon'ble Supreme Court of India in its judgment held that the due dates mentioned in 43B on the deemed income held in trust have to be deposited by the due dates mentioned in the respective welfare acts and that was always the intention of the legislature while enacting the provisions. Therefore, after considering the submission of the appellant, relevant Judicial decisions and the amendment to section 36(1)(va) and section 43B by the Finance Act 2021, the disallowance of employee's contribution to PF & ESI amounting to Rs. 27,42,990/- paid after due date is confirmed. This ground of appeal fails and is not allowed. The second ground relates to disallowance of deduction claimed under section 80JJAA of the Act amounting to Rs. 12,54,481/- on account f non-furnishing of Form 10DA. The appellants contention is that the requirement to furnish Form 10DA applies only when new employees joined the company and the deduction can be claimed for three consecutive assessment years irrespective of whether any new employees joined the company in the present year or not. The provisions of section 80JJAA of the Act is seen to be guided by Rule....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ribunal in the case of the assessee should be applied as it is binding on the Tribunal. 6. We have heard the rival arguments made by both the sides and perused the available material on record. Undoubtedly in the present case, the assessee has deposited the Employee's Contribution after the due date prescribed under the Act. The above said fact has been duly submitted by the assessee himself and which is forming part of the learned CIT (A)'s order by way of written submission. At page 6 to 7 of the order of the learned CIT (A), the following 3 tables have been reproduced by the learned CIT (A) on the basis of the written submission filed by the assessee. The following table shows the details of payment to ESI & PF For the AY 2018-19 Fund Payment details S.No Nature of Fund Sum received from employees Actual Amount Paid Due date for payment Actual date of payment Deposited before due date of filling ITR 1. ESI 20.,052 20.,052 21/06/2017 07/07/2017 Yes 2. ESI 27,963 27,963 15/07/2017 16/07/2017 Yes 3. ESI 29,774 29,774 15/08/2017 15/09/2017 Yes 4. ESI 31,169 31,169 15/09/2017 1....