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Income Tax Appellate Tribunal, CHANDIGARH BENCH ‘A’, CHANDIGARH
Before: SHRI SANJAY GARG & SMT.ANNAPURNA GUPTA
(Hearing through webex) आदेश/ORDER Per Annapurna Gupta, Accountant Member:
The present appeal has been preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals), Delhi [(in short the ‘Ld. CIT(A)] National Faceless Appeal Centre (NFAC) Delhi, dated 29.04.2021 A.Y. 2019-20 Page 2 of 6 relating to assessment year 2019-20, passed u/s 250 of the of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’).
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.18,21,088/- by invoking the provisions of section 36(1)(v) of the Act. The Ld.CIT(A) upheld the addition 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(1)(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(1)(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 though effected by the Finance Act, 2021 but A.Y. 2019-20 Page 3 of 6 when read in the background of the decision of the Hon'ble Apex Court in the case of Allied Motors Pvt. Ltd. Vs. CIT, 91 Taxman, 205 (SC), and the intention of the Legislature set out through the Memorandum to the Finance Act 2021 while introducing the Explanations to the sections, made it clear that the said amendments would apply to all pending matters as on date. Accordingly, he brushed aside 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. Therefore applying the amendments to section 43B and section 36(1)(va) of the Act, the Ld.CIT(A) upheld the disallowance of employers’ contribution to ESI and PF not paid before the due date specified in the said Acts.
Before us the Ld.Counsel for the assessee submitted that various Benches of the ITAT have already adjudicated this issue in favour of the assessee. He referred to the decision of the ITAT, Delhi Bench in the case of Insta Exhibition Pvt. Ltd Vs. Addl.CIT in dated 03.08.2021, the decision of ITAT, Hyderabad Bench in the case of Crescent Roadways Pvt. Ltd; Vs. DCIT in ITA No.1952/Hyd/2018, dated 01.07.2021 and the decision of A.Y. 2019-20 Page 4 of 6 ITAT Chandigarh Bench in the case of Hotel Surya Vs. DCIT in & 134/Chd/2021, dated 05.08.2021. Copy of the orders was placed before us.
The Ld. DR was unable to bring any contrary judgment to our notice, nor was any distinguishing facts brought to our notice. He however relied on the order of the CIT(A).
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(1)(va) and 43B of the Act allowing the claim of such deduction only when paid by due dates specified in their respective Acts, holding the amendment to be applicable on all pending cases post the amendment.
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 A.Y. 2019-20 Page 5 of 6 that the amendment to section 36(1)(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(1)(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. Hemla 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(1)(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 A.Y. 2019-20 Page 6 of 6 therefore set aside and the AO is directed to allow the claim of the assessee..
In the result, the appeal of the assessee is allowed.
Order pronounced on 4 th October, 2021.