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Income Tax Appellate Tribunal, CHANDIGARH
Before: SMT. DIVA SINGH, JM & SMT.ANNAPURNA GUPTA, AM
आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,च�डीगढ़ �यायपीठ आयकर अपीलीय अिधकरण च�डीगढ़ �यायपीठ च�डीगढ़ �यायपीठ ‘‘ए’, च�डीगढ़ च�डीगढ़ �यायपीठ च�डीगढ़ च�डीगढ़ च�डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH ‘A’ CHANDIGARH �ीमती �ीमती �दवा �ीमती �ीमती �दवा �दवा �सह �दवा �सह �सह, �याियक �सह �याियक �याियक सद�य �याियक सद�य सद�य एवं सद�य एवं एवं, एवं एवं एवं एवं �ीमती एवं �ीमती �ीमती अ�पूणा� �ीमती अ�पूणा� अ�पूणा� गु�ा अ�पूणा� गु�ा गु�ा, लेखा गु�ा लेखा लेखा सद�य लेखा सद�य सद�य सद�य BEFORE: SMT. DIVA SINGH, JM & SMT.ANNAPURNA GUPTA, AM आयकर अपील अपील संसंसंसं./ ITA No. 194/CHD/2021 आयकर आयकर आयकर अपील अपील िनधा�रण वष� िनधा�रण वष� / Assessment Year : 2018-19 िनधा�रण वष� िनधा�रण वष� Surya Resorts Pvt. Ltd., The DCIT, बनाम 1, Mcleodganj, Dharamshala, CPC, Bangalore. VS Himachal Pradesh. (ACIT Circle, Palampur). �थायी लेखा सं./PAN /TAN No: AACCS9313F अपीलाथ�/Appellant ��यथ�/Respondent िनधा�रती क� ओर से/Assessee by : Shri Chetan Sharma, CA राज�व क� ओर से/ Revenue by : Shri Ashok Khanna, Sr. DR तारीख/Date of Hearing : 09.11.2021 उदघोषणा क� तारीख/Date of Pronouncement : 18.11.2021 VIRTUAL HEARING आदेश/ORDER आदेश आदेश आदेश PER DIVA SINGH By the present appeal, the assessee assails the correctness of the order dated 08.07.2021 passed u/s 250 of the Income Tax Act,1961 by the CIT(A) (NFAC i.e. National Faceless Appeal Centre) Delhi pertaining to 2018-19 assessment year. In the said appeal, the assessee raises the following grounds : 1. That in the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) gravelly erred in upholding the action of the Ld. Assessing Officer who had made addition of Rs. 5,24,104/- on account of late payment of EPF, though the amount was duly paid before the due date of filing of return of income under section 139(1), hence it is an allowable expenditure as per the judgment of Honorable SC in the case of Pr. CIT vs Rajasthan State Beverages Corporation Ltd. 84 taxmnn.com 185
ITA 194 /CHD/2021 A.Y. 2018-19 Page 2 of 9
That in the facts and circumstances of the case, the Ld. Commissioner of Income Tax (Appeals) erred in not following the binding decision of jurisdictional Himachal Pradesh High Court in the case of CIT vs Nipso Polyfabrika Ltd. [2013] 350 ITR 327 (supra) without giving any bonafide reasons, so impugned CIT(A) order, passed without following jurisdictional High Court, is illegal and void in the eyes of law. 2. The ld. AR Mr. Chetan Sharma appearing on behalf of the
assessee, at the time of hearing submitted that the point at issue
is fully covered in favour of the assessee by virtue of the various
orders of the ITAT including the Chandigarh Benches on this
issue. Reliance was also placed on the decision of the
jurisdictional High Court sited in Ground No. 2 which since the
assessee was in Dharamshala, was the Hon'ble High Court of
Himachal Pradesh.
The ld. Sr.DR Mr. Ashok Khanna considering the record
relied upon the impugned order. No distinguishing facts,
circumstances or position of law was canvassed in support of the
impugned order.
We have heard the rival submissions and perused the
material available on record. It is an admitted fact that there
was a delay in the payment of EPF relatable to the employees’
contribution as far as the time limit set out by the specific Act is
concerned. It is also an admitted fact that the return was filed
by the assessee within the due date as per the time limit as set
out u/s 139(1) of the Income Tax Act. Hence, the amount of the
employees’ contribution of the EPF amounting to Rs. 5,24,104/-
stood paid before the filing of the return. It is seen that the
ITA 194 /CHD/2021 A.Y. 2018-19 Page 3 of 9
disallowance made was sustained by Addl. Commissioner on
account of the fact that the Amendments carried out by Finance
Act 2021 in Sections 36(1)(va) and Sec. 43B were considered to
be clarificatory, hence retrospective in nature. The said view has
consistently been held to be incorrect by various orders of the
ITAT as on a bare consideration of the Notes on Clauses
appended to the Finance Bill it was clarified that the Amendment
will take effect from the First April 2021. Thus, the legal
position thereon is well settled. The Co-ordinate Benches have
consistently right from order dated03.08.2021 of the Delhi
Benches in Insta Exhibitions Pvt. Ltd. Vs Addl. CIT, New Delhi
in ITA No. 6941/Del/2017 and Hyderabad Benches vide order
dated 01.07.2021 in M/s Crescent Roadways Pvt. Ltd. V Dy.
CIT, Hyderabad in ITA No. 1952/Hyd./2018 have held that
the amendments are prospective and not retrospective in
nature. The reasoning has been addressed at length in the
order dated 02.11.2021 in the case of Shri Sukhdev Singh,
Mohali Vs ITO, Chandigarh in ITA 250/CHD/2021 wherein
it was held:
“4. We have heard the submissions and perused the material available on record. It is seen that the issue is no longer res- integra as the decision of the jurisdictional High Court amongst others has been followed by the ITAT Chandigarh Benches vide its order dated 01.07.2021 in the case of M/s Jupiter Aqua Lines Pvt. Ltd. Vs DCIT ITA 83/CHD/2021 and order dated 04.10.2021 in the case of Ajay Piplani Vs Assistant Director of Income Tax, CPC, Bengaluru in ITA No. 114/CHD/2021. Similar view has been expressed by the Delhi Benches vide order dated 03.08.2021 in Insta Exhibitions Pvt. Ltd. Vs Addl. CIT, New Delhi in ITA No. 6941/Del/2017, Hyderabad Benches
ITA 194 /CHD/2021 A.Y. 2018-19 Page 4 of 9
vide order dated 01.07.2021 in M/s Crescent Roadways Pvt. Ltd. V Dy. CIT, Hyderabad in ITA No. 1952/Hyd./2018. We find that the issue has been elaborately discussed by the Co-ordinate Benches for example in Insta Exhibitions Pvt. Ltd. (supra) as under : 6. We have carefully considered contentions of the learned departmental representative and perused the orders of the lower authorities. The facts shows that the assessee has collected the sum of Rs. 12,16,260/- being employee's contribution under the provident fund and with respect to ESI laws. The above contribution was admittedly not deposited by the assessee within the due date prescribed under the respective ESI and PF statue however, same was deposited before the due date of filing of return of income. Therefore, the Id AO as well as the Id CIT(A) disallowed the same holding that such contribution becomes the income of the assessee under the provision of section 2(24)(x) of the Act and thereafter if the same is deposit within the due date prescribed under the respective laws then same is allowable as deduction u/s 36(l)(va) of the Act. Coordinate bench in case of DOT Vs Dee Development Engineers in ITA No. 4959/DEL/2016 ( A.Y 2011-12) has held as Under:- 7. We have heard both the parties and perused all the relevant material available on record. As regards Ground No. 1, the assessee company has not deposited the employees' contribution within the due date which is prescribed under the said statute i.e. Provident Fund and ESIC. This issue is dealt by the Hon'ble Delhi High Court in case of CIT vs. M/s Bharat Hotels Ltd. 410 ITR 417 wherein the issue is decided in favour of the revenue, without considering the decision of the Hon'ble Delhi High Court in case of CIT vs. AIMIL Ltd.(2010) 321 ITR 508 (Del.). But the Ld. AR relied upon the decision of the Hon'ble Delhi High Court In case of Pr, CU vs. Pro Interactive Service (India) Pvt. Ltd. ITA No. 983/2018 pronounced on 10.09.2018 wherein the Hon'ble High Court decided the issue in favour of the assessee relying upon the judgment of AIMIL Ltd. (supra). The Hon'ble Delhi High Court held that the legislative intent was/is to ensure that the amount paid is allowed as expenditure only when payment is actually made. We do not think that the legislative intent and objective is to treat belated payment of Employee's Provident Fund (EPD) and Employee's State Insurance Scheme (ESI) as deemed income of the employer under Section 2(24)(x) of the Act. It is settled law that when two judgments are available giving different views then the judgment which is in favour of the assessee shall apply as held in case of Vegetable Products Ltd. 82 ITR 192 by the Hon'ble Supreme Court. Hence, in light of the latest decision in case of Pro Interactive Service (India)
ITA 194 /CHD/2021 A.Y. 2018-19 Page 5 of 9
Pvt. Ltd., the issue is covered in favour of the assessee. Hence, Ground No. 1 is dismissed." 7. Further with respect to the argument of the learned departmental representative that amendment made with finance act 2021 wherein explanation 1 is added u/s 36 (1) (va) of the act with effect from 1 April 2021, is applicable to the present case, we referred to the "Notes on clauses" at the time of introduction of the finance bill 2021 which says as Under:- "Clause 8 of the Bill seeks to amend section 36 of the Income-tax Act, relating toother deductions. Sub- section (1) of the said section provides for allowing of deductions provided for in the clauses thereof for computing the income referred to in section 28 of the said Act. Clause (va) of the said sub-section provides for allowance of deduction for 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" means the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued thereunder or under any standing order, award, contract of service or otherwise. It is proposed to insert Explanation 2 to clause (va) of sub-section (1) of the said section so as to clarify 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 the said clause. This amendment will take effect from 1st April, 2021. And will accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years.”
Therefore it is apparent that the above amendment do not apply to the assessment year 2014 - 15 in this appeal. 8. In view of this we allow the solitary ground of appeal raised by the assessee holding that the addition/disallowance made by the learned assessing officer of late deposit of employees contribution to the provident fund and ESI, as it is deposited before the due date of the filing of the return of an income but beyond the due date prescribed Under the respective provident fund and ESI laws is not sustainable in law. 9. In the result, appeal of the assessee is allowed.
ITA 194 /CHD/2021 A.Y. 2018-19 Page 6 of 9
We further find that the Chandigarh Benches also consistently following the decisions of the jurisdictional High Court in the case of CIT Vs Nuchem Ltd (ITA No. 323 of 2009) and CIT Vs Hemla Embroidery Mills Pvt. Ltd.(2014) 366 ITR 167 have allowed similar claims of the assessee taking note of the fact the various Co-ordinate Benches have consistently held that the amendment to section 36(l)(va) and u/s 43B of the Act effected by the Finance Act 2021 is applicable prospectively ,reading from the Notes on Clauses at the time of introduction of the Finance Act, 2021, specifically stating the amendment being applicable in relation to assessment year 2021-22 and subsequent years. Accordingly, considering the factual backdrop of the present case and considering the amendments in Section 36(1)(va) as well as Section 43B carried out by Finance Act, 2021 and Memorandum explaining the provisions in Finance Bill, 2021 we hold that the impugned disallowance is not sustainable and is directed to be deleted. The appeal of the assessee is allowed. Said order was pronounced in the presence of the parties via Webex.” (emphasis supplied) 5. Similar view has also been taken in order dated
02.11.2021 in the case of M/s Czar Faucets Limited
Chandigarh Vs DCIT, Bangalore in ITA 255/CHD/2021; in
order dated 16.11.2021 in the case of Pooja Sarees, Ambala
City in ITA No. 184/CHD/2021 and in order dated
16.11.2021 in the case of M/s A.K. Creative Outsourcing
Services Pvt. Ltd., Baddi in ITA No. 252/CHD/2021. The
specific reasoning summing up the legal position on similar
facts is extracted hereunder from M/s A.K. Creative
Outsourcing Services Pvt. Ltd.:
“5. We have heard the submissions and perused the material available on record. Considering the issue, it is seen that it is no longer res-integra. The controversy whether the Amendments carried out by the Finance Act, 2021 in Section 36(l)(va) and u/s 43B of the Act were prospective in nature or retrospective, hence clarificatory in nature have been put to rest by consistent orders of the different Benches of the ITAT namely order dated 03.08.2021 in Insta Exhibitions Pvt. Ltd. Vs Addl. CIT, New Delhi in ITA No. 6941/Del/2017 of the Delhi Benches; order dated 01.07.2021 of Hyderabad Benches in M/s Crescent Roadways Pvt. Ltd. V Dy. CIT, Hyderabad in ITA No. 1952/Hyd./2018, order dated 27.08.2021 in the case of M/s Jupiter Aqua Lines Pvt. Ltd. Vs DCIT ITA 83/CHD/2021 and order dated 04.10.2021 in the case of
ITA 194 /CHD/2021 A.Y. 2018-19 Page 7 of 9 Ajay Piplani Vs Assistant Director of Income Tax, CPC, Bengaluru in ITA No. 114/CHD/2021 of the ITAT Chandigarh Benches. Reference may also be made to various other orders of the Chandigarh Benches in ITA 250/CHD/2021 in the case of Shri Sukhdev Singh, Mohali and ITA 255/CHD/2021 in the case of M/s CZAR FAUCETS Ltd. Chandigarh wherein consistently following the decisions of the jurisdictional High Court in the case of CIT Vs Nuchem Ltd (ITA No. 323 of 2009) and CIT Vs Hemla Embroidery Mills Pvt. Ltd.(2014) 366 ITR 167, the Tribunal has consistently allowed similar claims of the assessee holding that the Amendments effected by the Finance Act 2021 to section 36(l)(va) and u/s 43B of the income Tax Act are not clarificatory in nature and they do not have retrospective effect and are applicable prospectively. Reading from the Notes on Clauses at the time of introduction of the Finance Act, 2021, it has been held that the amendment being applicable in relation to assessment year 2021-22 and subsequent years. Accordingly, considering the factual backdrop of the present case and considering the amendments in Section 36(1)(va) as well as Section 43B carried out by Finance Act, 2021 and Memorandum explaining the provisions in Finance Bill, 2021 we hold that the impugned disallowance is not sustainable. Hence, the addition is directed to be deleted as the amount stood deposited by the due date as held in Section 139(1) of the Act. Hence, within time. The appeal of the assessee is allowed. Said order was pronounced in the presence of the parties via Webex.” (emphasis supplied) 6. Accordingly, on account of the aforementioned
reasoning, we hold that the disallowance of Rs. 5,24,104/-
sustained in the present appeal by the CIT(A) qua the
employees’ contribution despite late payment qua the
specific Act cannot be made. Admitte dly, in the facts of the
present case the payment has been made well within the time
line as set out under the Income Tax Act u/s 139(1) of the
Income Tax Act. Thus, admittedly the return of income was
filed well within time after making the specific payments.
The position of law that the Amendments carried out by the
Finance Act, 2021 are prospective in nature and not
declaratory stand well settled. The disallowance,
accordingly, cannot be sustained.
ITA 194 /CHD/2021 A.Y. 2018-19 Page 8 of 9
Before parting, it is necessary to refer to the decision of
the jurisdictional High Court referre d to by the assessee in
the specific ground No. 2 raised in the present appeal
wherein the decision of the Hon'ble Himachal Pradesh High
Court in the case of CIT vs Nipso Polyfabrika Ltd. [2013]
350 ITR 327 has been relied upon. The said decision, it is
seen, specifically deals with the e mployees’ contribution.
Their Lordships relying upon decision of the Apex Court in
the case of CIT Vs Alom Extrusions Ltd. (2009) 319 ITR
306 (which was in the context of employers’ contribution)
referring to the decision of the Hon'ble Delhi High Court in
the case of CIT Vs Aimil Ltd. (2010) 321 ITR 508 took
specific cognizance of the fact that this decision pertained to
the employee’s contribution wherein again a reference had
been made to the decision of the Apex Court in the case of
CIT Vs Vinay Cement 313 ITR 1. Considering the reasoning
in these decisions, Their Lordships in the case of Nipso
Polyf abriks Ltd. (supra) consciously followed the view taken
by the Hon'ble Delhi High Court in Aimil’s case and
concluded that the view expressed by the Hon'ble Kerala
High Court in CIT Vs Commonwealth Trust Ltd. (2004) 269
ITR 290 was not being followed as it was considered to be
“no longer good law in view of the judgement of the Apex
Court in Alom Extrusions Ltd.” Accordingly, reliance placed
ITA 194 /CHD/2021 A.Y. 2018-19 Page 9 of 9
by the ld. AR on the decision of the jurisdictional High Court
qua the employee’s contribution stands addressed in favour
of the assessee. However, the said decision has not taken
into consideration the change proposed by the Amendments
carried out by Finance Act, 2021 which we have addressed at
length in the earlier part of this order. This issue stands
covered by various decisions of the ITAT which stand
addressed. Accordingly, the ground of the assessee is
allowed. Said order was pronounced in the presence of the
parties via Webex.
In the result, appeal of the assessee is allowed.
Order pronounced on 18th November, 2021.
Sd/- Sd/- गु�ा ) ( अ�पूणा� अ�पूणा� गु�ा ( �दवा �दवा �सह �सह ) अ�पूणा� अ�पूणा� गु�ा गु�ा �दवा �दवा �सह �सह (ANNAPURNA GUPTA) (DIVA SINGH) लेखा सद�य सद�य/ Accountant Member �याियक �याियक सद�य सद�य/ Judicial Member लेखा लेखा लेखा सद�य सद�य �याियक �याियक सद�य सद�य “