SH. GURJANT SINGH AOLUKH,MOHALI vs. ITO-WARD-6 (1), CHANDIGARH

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ITA 239/CHANDI/2021Status: DisposedITAT Chandigarh02 November 2021AY 2018-195 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the amendment made by the Finance Act, 2021, to Section 36(1)(va) and Section 43B of the Act is applicable prospectively. Therefore, the disallowance made on the strength of this amendment for the assessment year 2018-19 was not sustainable.

What were the facts?

The assessee's delayed payment of employees' contribution to ESI and PF was disallowed by the AO and upheld by the CIT(A) based on amendments to Section 43B and 36(1)(va) of the Income Tax Act. The assessee contended that the amendment was prospective and that payments were made before the due date of filing the return of income.

What were the issues?

Whether the amendments made to Section 36(1)(va) and Section 43B by the Finance Act, 2021, are retrospective or prospective in application regarding the disallowance of delayed employees' contribution to ESI and PF.

Which sections of the Income-tax Act were involved?

Section 36(1)(va),Section 43B,Section 139(1)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, CHANDIGARH

Before: SMT. DIVA SINGH, JM & SMT.ANNAPURNA GUPTA, AM

For Appellant: Shri Ajay Jain, C.A
Hearing: 01.11.2021Pronounced: 02.11.2021

आयकर अपील�य अ�धकरण,च�डीगढ़ �यायपीठ “ए” च�डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A” CHANDIGARH �ीमती �ीमती �दवा �ीमती �ीमती �दवा �दवा �संह �दवा �संह �संह, �याियक �संह �याियक �याियक सद�य �याियक सद�य सद�य एवं सद�य 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 सं./ �नधा�रण वष� / Assessment Year : 2018-19 Shri Gurjant Singh Aolukh, बनाम The ITO, 1146, SEcstor 67, Ward – 6(1), VS Mohali. Chandigarh. �थायी लेखा सं./PAN No: AAWPA8638E अपीलाथ�/Appellant ��यथ�/Respondent �नधा�रती क� ओर से/Assessee by : Shri Ajay Jain, C.A. राज�व क� ओर से/ Revenue by : Smt. Priyanka Dhar, JCIT सुनवाई क� तार�ख/Date of Hearing : 01.11.2021 उदघोषणा क� तार�ख/Date of Pronouncement : 02.11.2021 Hearing conducted via Webex आदेश/ORDER PER BENCH:

The present appeal has been filed by the assessee against the order of the Commissioner of Income Tax, National Faceless Appeal Centre, Delhi,(in short referred to as CIT(A) relating to A.Y 2018-19,passed u/s 250(6) of the Income Tax Act,1961(hereinafter referred to as “Act”)dated 30.07.2021.

ITA -239/CHD/2021 A.Y. 2018-19 Page 2 of 5

2.

The solitary issue in the present appeal relates to the addition made to the income of the assessee in the intimation made u/s 143(1) of the Act, by disallowing delayed payments of employees contribution to ESI and PF amounting to Rs. 8,70,211/- by invoking the provisions of section 36(l)(va) of the Act.

The Ld.CIT(A) upheld the addition relying upon various decisions of the ITAT and Hon’ble High Courts and also on the basis of the amendment effected by the Finance Act, 2021, to section 43B of the Act by insertion of Explanation-5 and to section 36(l)(va) of the Act by insertion of Explanation-2, both to the effect that due date for payment of employees' contribution to ESI and PF, for the purpose of claiming deduction of the said amount as per the provisions of section 36(l)(va) of the Act was not governed by section 43B stipulating the due date to be till the filing of return of income u/s 139(1) of the Act, meaning thereby the employees' contribution to ESI and PF was to be paid by due date specified in their respective Acts for the purpose of claiming deduction thereof. The Ld.CIT(A) held that the said amendment to be clarificatory and hence retrospective in application. Accordingly, the contention of the Ld.Counsel for the assessee that the issue already stood decided in its favour by the Hon'ble Jurisdictional High Court in the case of CIT vs Rai Agro Industries(2011) 334 ITR 122(P&H) &

ITA -239/CHD/2021 A.Y. 2018-19 Page 3 of 5 CIT vs Hemla Embroidery Mills (P) Ltd(2014) 366 ITR 167(P&H), was brushed aside and the addition upheld.

3.

At the outset itself, it was pointed out by the ld. counsel for the assessee that the issue is squarely covered by the decision of the Co-ordinate Bench in the following cases i) Ajay Piplani Vs Assistant Director of Income Tax, CPC, Bengaluru in order dated 04.10.2021 ii) M/s.Jupiter Aqua Lines Pvt. Ltd vs DCIT ,Circle 6(1) Mohali in ITA No.83/Chd/2021 dated 27 th August 2021.

Copy of both the orders was placed before us.

4.

The ld. DR fairly admitted that the issue stood covered by the aforesaid decision.

5.

We have heard both the parties. We have also gone through the order of the ITAT in the case of Ajay Piplani (supra) wherein the issue has been adjudicated at para 5 to 7 of the order as under :

5. We have heard both the parties. It is not denied that the employees contribution to ESI and PF was allowable and claimed as deduction by the assessee on the strength of various decisions of the jurisdictional High Court holding contributions deposited by the due date of filing of return of income u/s 139(1) of the Act as allowable. The Revenue has disallowed the same in the impugned year by applying the amendment made by Finance Act 2021 to section 36(l)(va) and 43B of the Act allowing the claim of such deduction only when paid by due

ITA -239/CHD/2021 A.Y. 2018-19 Page 4 of 5 dates specified in their respective Acts, holding the amendment to be applicable on all pending cases post the amendment.

6.

We have gone through the orders of the coordinate Benches of the ITAT cited by the Ld.Counsel for the assessee before us and have noted that it has been 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. Therefore the addition, we hold, cannot be made on the strength of the amendment effected by Finance Act 2021 to section 36(l)(va)/43B of the Act. Moreover it is an admitted position that the jurisdictional High Court has in various decisions held that employees contribution to ESI & PF is allowable if paid by the due date of filing return of income u/s 139(1) of the Act. The jurisdictional High Court has held so in the following cases:

1) CIT Vs. Nuchem Limited, of 2009 2) CIT Vs. Hernia Embroidery Mills Pvt. Ltd.(2014), 366 ITR 167 7. In view of the above, we hold that the claim of employees contribution to ESI and PF as per section 36(l)(va) of the Act cannot be denied in the impugned year, i.e. 2019-20 on the basis of amendment made to the section by Finance Act 2021. The order of the Ld.CIT(A) upholding the said disallowance to the tune of Rs. 18,21,088/- is therefore set aside and the AO is directed to allow the claim of the assessee.”

6. Since the issue involved in the present appeal admittedly is identical, relating to the disallowance of employees’ contribution to ESI and PF made as per the amendment made to Section 36(1)(va) of the Act by the Finance Act, 2021, though admittedly the amounts stood paid before the due date of filing

ITA -239/CHD/2021 A.Y. 2018-19 Page 5 of 5 of return of income, the facts are identical to that in the case of Ajay Piplani (supra) and the issue, therefore, is squarely covered by the aforesaid decision. Following the same, the disallowance made of ESI/PF employees’ contribution u/s 36(1)(va) amounting to Rs8,70,211/- is deleted.

7.

In the result, appeal of the assessee is allowed.

Order pronounced on 02.11.2021.

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