DIGIQAL SOLUTION SERVICES PVT.LTD,CHANDIGARH vs. ITO-WARD-5(1), CHANDIGARH

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 dated 25.05.2021 relating to A.Y. 2019-20 assessment year 2019-20, passed u/s 250 of the of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’).

of the Act. The Ld.CIT(A) upheld the addition holding that the amendment effected by the Finance Act, 2021 to section 43B of the Act by insertion of Explanation-5 and 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 when read in the background of the decision of the Hon'ble A.Y. 2019-20 Taxman, 205 (SC), the intention of Legislature set out

through memorandum through the Finance Act while

introducing the Explanations to section 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 Juri ictional High

Court and applying the amendments to section 43B and section 36(1)(va) of the Act disallowed the employers’

contribution to ESI and pF not paid before the due date

specified in the said Acts.

of the ITAT, Hyderabad Bench in the case of Value

Momentum Software ; Vs. DCIT in ITA No.2197/Hyd/2017,

dated 19.05.2021 and the decision of ITAT Chandigarh

Bench in the case of Hotel Surya Vs. DCIT in ITA Nos.133 &

134/Chd/2021, dated 05.08.2021. Copy of the orders was placed before us.

to our notice, nor was any distinguishing facts brought to A.Y. 2019-20 our notice. He however relied on the order of the CIT(A).

and claimed as deduction by the assessee on the strength of various decisions of the juri ictional 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.

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, consistently holding

that the amendment to section 36(1)(va) and u/s 43B of A.Y. 2019-20 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 juri ictional 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 juri ictional High Court has held so in the following

cases:

1) 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. 6,87,309/- is therefore set aside and the AO is directed to allow the claim A.Y. 2019-20 of the assessee..

आदेश क" ""त"ल"प अ"े"षत/ Copy of the order forwarded to : 1. अपीलाथ"/ The Appellant

आदेशानुसार/ By order, सहायक पंजीकार/