BENCO THERMAL TECHNOLOGIES PVT LTD,CHENNAI vs. ASST. DIRECTOR OF INCOME TAX, BENGALURU

आयकर अपीलीय अिधकरण ‘सी’ �ायपीठ चे�ई म�। IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, CHENNAI माननीय �ी वी. दुगा� राव, �ाियक सद� एवं माननीय �ी मनोज कुमार अ�वाल ,लेखा सद� के सम�। BEFORE HON’BLE SHRI V. DURGA RAO, JUDICIAL MEMBER AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM

आयकर अपील सं./ ITA No.281/Chny/2021 (िनधा�रण वष� / Assessment Year: 2019-20) M/s Benco Thermal Technologies Pvt. Ltd. Asst. Director of Income Tax बनाम 236 & 237, SIDCO Industrial Estate Centralized Processing Center / Vs. Thirumudivakkam, Chennai – 600 044. Bengaluru – 560 500 �थायी लेखा सं./जीआइ आर सं./PAN/GIR No. AAACB-3044-J (अपीलाथ�/Appellant) : (��थ� / Respondent) अपीलाथ� की ओरसे/ Appellant by : Shri Yeswanth Kumar (CA)-Ld. DR ��थ� की ओरसे/Respondent by : Shri P.Sajith Kumar (JCIT) – Ld. DR सुनवाई की तारीख/ : 23-02-2022 Date of Hearing घोषणा की तारीख / : 23-02-2022 Date of Pronouncement आदेश / O R D E R ::Manoj Kumar Aggarwal (Accountant Member) :: 1. Aforesaid appeal by assessee for Assessment Year (AY) 2019-20 arises out of the order of learned Commissioner of Income Tax (Appeals), NFAC, Delhi [CIT(A)] dated 26.07.2021 in the matter of intimation issued by Centralized Processing Center (CPC), Bengaluru u/s 143(1) on 10.05.2020. The solitary issue involved in the appeal is disallowance of Employee’s contribution to Provident Fund (PF) & Employees’ State Insurance (ESI) amounting to Rs.6,47,265/-. The said

ITA No.281/Chny/2021 - 2 - disallowance has been made u/s 36(1)(va) since there was late remittance as per the relevant statutes but the payment was made by the assessee within the due date of filing of return u/s 139(1). This appeal was heard along with bunch of other appeals having similar issue. This appeal is taken as the lead appeal. It is admitted position that the adjudication in this appeal would equally apply to all the other bunched appeals also. 2. Though the assessee has raised multiple grounds of appeal, however, Ld. AR (appearing for assessee) has submitted that all the grounds including legal grounds, except for grounds on merits, are not being pressed in the appeal. Accordingly, all these ground stands dismissed as not pressed. The Ld. AR also made a statement at bar that though there was late remittance of ESI and PF dues under the relevant statutes, however, the dues were remitted by the assessee well before due date of filing of return of income u/s 139(1). The Ld. AR submitted that the issue, on merits, is covered by various decisions of Hon’ble High Courts. The same has briefly been referred before us during the course of hearing. It was also submitted that the amendment made in Sec.36(1)(va) as well as in Sec.43B by Finance Act, 2021 would have prospective application only as held by the coordinate bench of this Tribunal in recent decision titled as Adyar Anand Bhawan Sweets India Pvt. Ltd. V/s ACIT (134 Taxmann.com 56; 08.12.2021). 3.1 The Ld. Jt.CIT-DR Shri P.Sajith Kumar (appearing for revenue), on the other hand, vehemently opposed the stand of Ld. AR and filed written submissions. In these submissions, Ld. DR has justified the disallowance u/s 36(1)(va) by submitting that this section deals with contribution made by the Employees of the assessee to welfare funds

ITA No.281/Chny/2021 - 3 - out of their salaries which has illegally been retained by the assessee. The Ld. DR would submit that the late remittance of Employee’s contribution would deprive crores of Employees’ of the rightful earning of interest and earning of timely benefits on their contribution for the period for which the employer held such moneys of the employee & used it illegally for their own business purposes and thus unjustly enriching the employer. The Ld. DR submitted that the sums were received by the employer in fiduciary capacity and any late remittance of the same should result into denial of deduction to the assessee in terms of the provisions of Sec.36(1)(va). 3.2 The Ld. DR submitted that amendment brought in by Finance Act, 2021 to Sec.36(1)(va) as well as to Sec.43B would be prospective in nature as would be evident from the explanatory note to the Finance Act- 2021 which read as under: - "Though section 43B of the Act covers only employer's contribution and does not cover employee contribution, some courts have applied the provision of section 43B on employee contribution as well. There is a distinction between employer contribution and employee's contribution towards welfare fund. It may be noted that employee's contribution towards welfare funds is a mechanism to ensure the compliance by the employers of the labour welfare laws. Hence, it needs to be stressed that the employer's contribution towards welfare funds such as ESI and PF needs to be clearly distinguished from the employee's contribution towards welfare funds. Employee's contribution is employee own money and the employer deposits this contribution on behalf of the employee in fiduciary capacity. By late deposit of employee contribution, the employers get unjustly enriched by keeping the money belonging to the employees. Clause (va) of sub-section (1) of Section 36 of the Act was inserted to the Act vide Finance Act 1987 as a measures of penalizing employers who mis-utilize employee's contributions " To facilitate the same, an explanation was inserted which start with the expression "for the removal of doubts, it is hereby clarified 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 this clause". The Ld. DR submitted that the wordings like 'for the removal

ITA No.281/Chny/2021 - 4 - of doubts', "provisions of section 43B shall not apply ", "shall be deemed never to have been applied for the purposes of determining the ‘due date' under this clause" would unambiguously clarify that the 'due date' as mentioned under Section 43B was never intended to have been applied for determining the ‘due date’ under the provisions of Section 36(l)(va). 3.3 The Ld. DR submitted that the cited decision of the Tribunal has completely ignored this legislative intent as well as the use of language in the explanation introduced and simply concluded that the clarificatory explanation introduced into the section would cause undue hardship to the assessee if held to be effective retrospectively. The same reasoning is based on the assumption that there was an ambiguity in the interpretation of law or the language usage in the law and hence, the assessee would have presumed and acted based on such presumption of the 'due date' and such actions already carried out cannot be reverse based on legislation made retrospectively. The Ld. DR submitted there was no ambiguity in the statutory provisions since the provisions of Sec.43B apply to Employers’ Contribution whereas the provisions of Sec.36(1)(va) apply to Employees’ Contribution. Thus, both the contributions were always intended to be treated differently by the legislatures. The same would also be evident from CBDT Circular No.22/2015 dated 12.12.2015 which clarified the position as under: - " ....Accordingly, w.e.f 1.4.1988, the settled position is that if the assessee deposits any sum payable by it by way of tax, duty, cess or fee by whatever name called under any law for the time-being in force, or any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees, on or before the 'due date' applicable in his case for furnishing the return of income under section 139(1) of the Act, no disallowance can be made under section 43B of the Act.

ITA No.281/Chny/2021 - 5 - It is clarified that this Circular does not apply to claim of deduction relating to employee's contribution to welfare funds which are governed by section 36(1 )(va) of the IT Act". In the above background, Ld. DR submitted that the assessee was bound to follow the statute and not be guided by interpretations of law, as pronounced by various judicial authorities particularly when there is no uniformity of stand on the issue of 'due date'. 3.4 The Ld. DR then referred to the decision of Hon’ble Supreme Court in CIT v/s Alom Extrusions Ltd. (319 ITR 306) wherein on a similar issue on interpretation of effective date, Hon’ble Supreme court held as under: "It is true that the Parliament has explicitly stated that Finance Act, 2003, will operate with effect from 1st April, 2004. However, the matter before us involves the principle of construction to be placed on the provisions of Finance Act, 2003. Before concluding, we extract herein below the relevant observations of this Court in the case of Commissioner of Income Tax, Bangalore vs. J.H. Gotla, reported in [1985] 1561.T.R. 323, which reads as under: "We should find out the intention from the language used by the Legislature and if strict literal construction leads to an absurd result, i.e., a result not intended to be sub served by the object of the legislation found in the manner indicated before, then if another construction is possible apart from strict literal construction, then that construction should be preferred to the strict literal construction. Though equity and taxation are often strangers, attempts should be made that these do not remain always so and if a construction results in equity rather than in injustice, then such construction should be preferred to the literal construction." For the afore-stated reasons, we hold that Finance Act, 2003, to the extent indicated above, is curative in nature, hence, it is retrospective and it would operate with effect from 1st April, 1988 [when the first proviso came to be inserted]. Relying on the same, Ld. DR submitted that the cited decision of Tribunal fails to address as to how the language used by the legislature could be implemented prospectively. It failed to appreciate that the stringent provision of section 36(1)(va) was introduced by the legislation to protect the interest of crores of low-paid salaried employees being exploited by the few employers and thus, was more penal in nature.

ITA No.281/Chny/2021 - 6 - 3.5 To conclude, Ld. DR submitted that the disallowance was reported by Tax Auditor in the Audit Report and the disallowance made by revenue authorities u/s 36(1)(va) was based on assessee’s own submission of ‘due date’ as mentioned in the audit report. It is clear from the Audit Report that ‘due date’ was to be considered as per the respective statutes of ESI and PF and not as per the Income Tax Act due date for filing the return. Thus, it was the submissions of Ld. DR that the appeal is liable to be dismissed since allowing the deduction would run detrimental to the rightful earning of crores of low paid employees. Our findings and Adjudication 4. We find that as per the provisions of clause (b) of Sec.43B of the Act, any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund and gratuity fund or any other fund for the welfare of employees would be allowed as deductions only on actual payment. However, the proviso to Sec. 43B provides that if the said sum is paid on or before due date for furnishing of return of income u/s. 139(1) of the Act, the deduction would still be available to the assessee. The term ‘Income’ as defined in Sec.2(24)(x) 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 the Employees’ State Insurance Act, 1948 (ESI) or any other fund for the welfare of such employees. In other words, the contribution received by the assessee from its employees towards specified welfare funds is always treated as income of the assessee. However, the provisions of Sec. 36(1)(va) of the Act provides that any sum received by the assessee in terms of Sec. 2(24)(x) of the Act shall

ITA No.281/Chny/2021 - 7 - be allowed as deduction, if such sum is credited by the assessee to the employees’ account in the relevant fund or funds on or before the due date. The term ‘due date’ as per Explanation would mean the date by which the assessee is required as an employer to credit employees’ contribution to the employees’ account in the relevant fund under any Act, rule, order or notification issued there-under or under any standing order, award, contract or service or otherwise. Thus, the contribution received by the assessee from its employees’ towards welfare funds, though treated as income u/s 2(24)(x), would be allowed as deduction u/s 36(1)(va) provided the same is remitted to the concerned funds before due date as specified in statute governing those funds. Any payment made beyond that date would result into denial of deduction to the assessee. 5. We find that even though the provisions of Sec.43B only covers the Employer’s contribution and not employees’ contribution, still the higher courts have held that the provisions of Sec.43B would be applicable to employees’ contribution as well. In other words, if the employees’ contribution has been paid by the assessee before due date of filing of return of income as per Sec.139(1), the deduction would still be available to the assessee notwithstanding the fact that the payment was made beyond the due date as per the applicable Acts & Rules governing the welfare funds. 6. One of such case is the decision of Hon’ble Karnataka High Court in the case of Essae Teraoka (P.) Ltd. (43 Taxmann.com 33: 04.02.2014). In this decision, the Hon’ble Court distinguished the case law of Hon’ble Gujarat High Court in the case of CIT V/s Gujarat State Road Transport Corpn. (41 Taxmann.com 100; 26.12.2013) and held

ITA No.281/Chny/2021 - 8 - that employees’ contribution so paid by the assessee before due date of filing of return of income u/s 139(1) would be an allowable deduction. The same was on the reasoning that the provisions of Sec.43B provide an extension to the employer to make payment of welfare funds by 'due date' applicable for furnishing the return of income u/s 139(1). It was held that the provisions of Sec.43B start with non-obstante clause and provide that notwithstanding anything contained in any other provision contained in this Act, a deduction otherwise allowable in this Act in respect of any sum payable by the assessee as an employer by way of contribution to any welfare fund, shall be allowed if it is paid on or before the due date as contemplated under Section 139(1). This provision has nothing to do with the consequences provided for under the PF Act / PF Scheme / ESI Act, for not depositing the 'contribution' on or before the due dates as specified therein. It was examined that the expression 'contribution' as defined in Section 2(c) under the PF Act would mean a contribution payable in respect of a member under the scheme or the contribution payable in respect of an employee to whom the Insurance Scheme applies. If this definition is read with sub-para (1) of paragraph 29 in Chapter-V of the PF Scheme, it would mean that the contributions payable by the employer under the scheme shall be at a particular rate and the contribution payable by the employee shall be equal to the contribution payable by the employer. The Paragraph 30 of the PF scheme provides for payment of contributions. Sub-para (1) of paragraph 30 states that the employer shall, in the first instance, pay both the contribution payable by himself (in this scheme referred to as the employer's contribution) and also, on behalf of the member employed by him directly or by or through a contractor, the contribution payable by

ITA No.281/Chny/2021 - 9 - such member (in this scheme referred to as the member's contribution). From bare perusal of sub-para (1) of paragraph 30, it is clear that the word 'contribution' is used not only to mean contribution of the employer but also contribution to be made on behalf of the member employed by the employer directly. The Paragraph 38 of the PF scheme provides for Mode of payment of contributions. As provided in sub-para (1), the employer shall, before paying the member, his wages, deduct his contribution from his wages and deposit the same together with his own contribution and other charges as stipulated therein with the provident fund or the fund under the ESI Act within fifteen days of the closure of every month pay. It is clear that the word 'contribution' used in clause (b) of section 43B means the contribution of the employer as well as the contribution of the employee. That being so, if the contribution is made on or before the due date for furnishing the return of income u/s 139(1), the employer is entitled for deduction. 7. Similar is the ratio of decision of Hon’ble Rajasthan High Court in the case of Pr. CIT V/s Rajasthan State Beverages Corpn. Ltd. (84 Taxmann.com 173; 04.08.2016) which followed the earlier decision in CIT V/s State Bank of Bikaner & Jaipur (43 Taxmann.com 411; 06.01.2014). The Hon’ble Court, in the case of CIT V/s State Bank of Bikaner & Jaipur (supra) held that the provisions of Sec.43B starts with a notwithstanding clause & would thus override Sec.36(1)(va) and if read in isolation, Sec. 43B would become obsolete. The Hon’ble Court further held that these provisions were brought in as the due amounts on one pretext or the other were not being deposited by the assessees though substantial benefits had been obtained by them in the shape of the amount having been claimed as a deduction but the said amounts were

ITA No.281/Chny/2021 - 10 - not deposited. The court observed that the respective Act such as PF etc. also provides that the amounts can be paid later on subject to payment of interest and other consequences and to get benefit under the Income Tax Act, an assessee ought to have actually deposited the entire amount as also to adduce evidence regarding such deposit on or before the return of income under sub-section (1) of Section 139 of the IT Act. Following the same, similar decision was rendered in Pr. CIT V/s Rajasthan State Beverages Corpn. Ltd. (supra). 8. We find that the revenue preferred Special leave Petition (SLP) against this decision which was dismissed by Hon’ble Supreme Court (reported as 84 Taxmann.com 185; 04/07/2017) with following observations: - 1. Delay condoned. 2. We do not find any merit in this petition. The special leave petition is, accordingly, dismissed.

In other words, the issue could be said to have attained finality since no merit was found in the revenue’s petition by Hon’ble Apex Court. 9. A similar view favorable to assessee has been taken by Hon’ble Karnataka High Court in Spectrum Consultants India Pvt. Ltd. V/s CIT (49 Taxmann.com 29; 09.12.2013); Hon’ble High Court of Bombay in CIT V/s Ghatge Patil Transports Ltd. (53 Taxmann.com 141; 14.10.2014); Hon’ble Delhi High Court in CIT V/s Aimil Ltd. (188 Taxman 265 23.12.2009); Hon’ble Patna High Court in the case of Bihar State Warehousing Corp. Ltd. (88 Taxmann.com 455; 16.03.2016); Hon’ble High Court of Uttarakhand in CIT V/s Kicha Sugar Co. Ltd. (35 Taxmann.com 54; 20.05.2013); Hon’ble High Court of Calcutta in CIT V/s Vijay Shree Ltd. (43 Taxmann.com 396;

ITA No.281/Chny/2021 - 11 - 06.09.2011). Thus, pre-dominant view of majority of Hon’ble High Court is in assessee’s favor wherein it was held that the Employees’ Contribution paid by the assessee before due date of furnishing of return of income u/s 139(1) would be an allowable deduction considering the provisions of Sec.43B. However, view against the assessee has been taken by Hon’ble Kerala High Court in Popular Vehicles & Services P. Ltd. V/s CIT (96 Taxmann.com 13; 02.07.2018) as well as Hon’ble Gujarat High Court in CIT V/s Gujarat State Road Transport Corpn. (supra). In these cases, the view of Hon’ble Courts is that the provisions of Sec.36(1)(va) and Sec.43B operate differently and therefore, any late remittance of Employees’ Contribution beyond due date as specified in relevant statutes governing those funds, would result into denial of deduction to the assessee in terms of Sec.36(1)(va) r.w.s. 2(24)(x). 10. So far as the decision of jurisdictional High Court of Madras is concerned, the coordinate bench of Hon’ble Court has rendered similar decision favoring assessee in CIT v. Industrial Security & Intelligence India (P.) Ltd. [TCA No. 585 of 2015, dated 24-7-2015] and held as under: - 5. We find that the Tribunal has rightly relied on the decision of the Supreme Court in the case of CIT V. Alom Extrusions Ltd. reported in 319 ITR 306, whereby, the Supreme Court held that omission of second proviso to Section 43B and amendment to first proviso by Finance Act, 2003 are curative in nature and are effective retrospectively, i.e., with effect from 1.4.1988 i.e., the date of insertion of first proviso. The Delhi High Court in the case of CIT V. Amil Ltd. reported in 321 ITR 508 held that if the assessee had deposited employee's contribution towards Provident Fund and ESI after due date as prescribed under the relevant Act, but before the due date of filing of return under the Income Tax Act, no disallowance could be made in view of the provisions of Section 43B as amended by Finance Act, 2003. 6. In the present case, the assessee had remitted the employees contribution beyond the due date for payment, but within the due date for filing the return of income. Hence, following the above-said decisions, we find no reason to differ with

ITA No.281/Chny/2021 - 12 - the findings of the Tribunal. Accordingly, we find no question of law much less any substantial question of law arises for consideration in these appeals. Accordingly, both the Tax Case (Appeals) stand dismissed. No costs. Consequently, M.P.No.1 of 2015 is also dismissed.

However, in later decision titled as Unifac Management Services (India) P. Ltd. V/s DCIT (100 Taxmann.com 244; 23.10.2018), the single judge bench of Hon’ble Court has held that the scope of Section 43B and Section 36(1)(va) are different and thus, there is no question of reading both provisions together to consider as to whether assessee- employer is entitled to deduction in respect of sum belatedly paid towards employee contribution and therefore, for considering such question, application of section 36(1)(va) read with section 2(24)(x) alone is proper course. It was further held that though an amendment has been introduced to Section 43B, whereby actual date of payment is enough for considering deduction, if such date falls before date for filing return but in absence of any amendment made to section 36(1)(va), both contributions, viz., 'employees' and 'employers' cannot be brought under same scope and ambit of section 43B to claim deduction. Keeping in view the fact that the decision in CIT v. Industrial Security & Intelligence India (P.) Ltd. (supra) has been rendered by co-ordinate bench, this decision shall have precedent over the decision of Unifac Management Services (India) P. Ltd. V/s DCIT (supra) which has been rendered by single judge bench. 11. In the light of aforesaid judicial precedents especially the decision of Hon’ble High Court of Madras in CIT v. Industrial Security & Intelligence India (P.) Ltd. (supra) and keeping in view the fact the Special Leave Petition (SLP) filed by the revenue against the decision of

ITA No.281/Chny/2021 - 13 - Hon’ble Rajasthan High Court favoring assessee has already been dismissed by Hon’ble Supreme Court (para-8), we are inclined to take a view favoring the assessee. Accordingly, we would hold that the provisions of Sec.43B would override the provisions of Sec.36(1)(va) and accordingly, the employees’ contribution as paid by the assessee before due date of filing of return u/s 139(1) would still be an allowable deduction notwithstanding the fact that the payment was made beyond due date as specified in the relevant statute governing those welfare funds. 12. So far as the effect of amendment brought in by Finance Act, 2021 is concerned, we find that Finance Act, 2021 has proposed amendment to Sec.36(1)(va) and Sec.43B to clarify the position that Sec.43B would never apply to such contributions. For the same, an explanation-2 has been inserted in Sec. 36(1)(va) which state that Section 43B would not apply and is presumed never to have been applied to establish the due date under this sub-section. Similarly, Explanation-5 has been inserted to Section 43B to explain that the rules of that section do not apply and are never regarded to have applied to any funds received by the assessee from employees. The controversy as to the date of applicability of amendment arises in view of the fact that both the Memorandum as well as the Finance Bill state that relevant amendment will take effect on 01/04/2021 and apply to Assessment Year 2021-22 and subsequent assessment years. The submissions of the revenue would be that the amendment is merely clarificatory in nature and would have retrospective operation. However, the assessee would maintain that the provisions would have prospective operations only and the pre-amended

ITA No.281/Chny/2021 - 14 - period would be largely guided by the ratio of judicial pronouncements favoring the assessee. 13. We find that this issue has already been settled by co-ordinate bench of this Tribunal in Adyar Anand Bhawan Sweets India Pvt. Ltd. V/s ACIT (134 Taxmann.com 56; 08.12.2021). In the said decision, it has already been held by the coordinate bench that the amendment to Sec.36(1)(va) by way of insertion of explanation-2 would operate prospectively only. This view has been taken by the bench considering the ratio of decision of Hon’ble Supreme Court in the case of CIT v. Vatika Township (P.) Ltd. [2014] 49 taxmann.com 249/227 Taxman 121/367 ITR 466 (SC) and it was finally held that the amendment brought in by Finance Act, 2021 to the provisions of Section 36(1)(va) as well as to the provisions of Sec.43B would have prospective application only. The pertinent observations of the bench were as under: - 6.7 We noted from the judgment of Hon'ble Supreme Court in Vatika Township (P.) Ltd. (supra), that there cannot be imposition of any tax without the authority of law and such law has to be unambiguous and should prescribe the liability to pay taxes in clear terms. In present case before us, as noted by CIT(A) that their exists divergent judgments of various High Courts. The CIT(A) has noted the case laws in favour of Revenue: 1. Popular Vehicles & Services (P.) Ltd. v. CIT [2018] 96 taxmann.com 13/257 Taxman 120/406 ITR 150 (Ker.) 2. CIT v. Gujarat Road Transport Corpn. [2014] 41 taxmann.com 100/223 Taxman 398/366 ITR 170 (Guj.) 3. CIT v. Merchem Ltd. [2015] 61 taxmann.com 119/235 Taxman 291/378 ITR 443 (Ker.) The CIT(A) himself noted the ambiguity in para 7.4 of his order, which reads as under: 7.4 While rendering above decisions the Hon'ble High Courts had the occasion to examine and distinguish a catena of judgements which are usually relied upon by appellants to advance the proposition that the provisions of section 43B encompass within its scope the employees' Contribution as well and therefore any such contribution though not remitted by the employer within due date specified by the PF/ESI Acts, will still be permissible deduction if the same is actually paid in pursuance of sec. 43B.

ITA No.281/Chny/2021 - 15 - The CIT(A) further noted the decisions in favour of assessee in para 7.7, and the same are as under: 1. CIT v. Alom Extrusions Ltd. [2009] 185 Taxman 416/319 ITR 306 (SC) 2. Aimil Ltd. (supra) 3. CIT v. Nispo Polyfabriks [2013] 350 ITR 327/213 Taxman 376/30 taxmann.com 90 (HP); 4. CIT v. Alembic Glass Industries Ltd. [2015] 279 ITR 331/149 Taxman 15 (Guj.); 5. CIT v. Sabari Enterprises [2008] 298 ITR 141 (Kar); 6. CIT v. Pamwi Tissues Ltd. [2009] 313 ITR 137 (Bom.); 7. Spectrum Consultants India (P.) Ltd. v. CIT [2013] 34 taxmann.com 20/215 Taxman 597 (Kar.); 8. CIT v. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. [2013] 35 taxmann.com 616/217 Taxman 64 (Mag.)/[2014] 366 ITR 163 (Raj.) and 9. CIT v. Hemla Embroidery Mills (P.) Ltd. [2013] 37 taxmann.com 160/217 Taxman 207 (Mag.)/[2014] 366 ITR 167 (Punj. & Har.). 6.8 In the present case also, before insertion of Explanation 2 to section 36(1)(va) of the Act, there is ambiguity regarding due date of payment of employees' contribution on account of provident fund and ESI, whether the due date is as per the respective acts or up to the due date of filing of return of income of the assessee. As noted by Hon'ble Supreme Court an amendment made to a taxing statute can be said to be intended to remove hardship only of the assessee and not of the Department. Imposing of a retrospective levy on the assessee would be caused undue hardship and for that reason Parliament specifically chose to make the proviso effective from a particular date. In the present case also, the amendment brought out by Finance Act, 2021 w.e.f. 1-4-2021 i.e. for and from assessment year 2021-22 of Explanation 2 to s. 36(1)(va) of the Act and not retrospectively. 6.9 Thus, from the above, it is clear that the amendment brought in the statute i.e., by Finance Act, 2021, the provisions of section 36(1)(va) r.w.s. 43B of the Act amended by inserting Explanation 2 is prospective and not retrospective. Hence, the amended provisions of section 43B r.w.s. 36(1)(va) of the Act are not applicable for the assessment year 2018-19 but will apply from assessment year 2021-22 and subsequent assessment years. Hence, this issue of assessee's appeal is allowed.

ITA No.281/Chny/2021 - 16 - presently we are concerned with a case wherein the contributions have already been deposited by the assessee before due date of furnishing of return of income u/s 139(1) and the assessee is claiming deduction of the expenditure under the scheme of the Act. Therefore, this argument of Ld. DR though may carry weightage from morality point of view but it would not be of much relevance to decide the issue as to whether the assessee is eligible to claim the expenditure keeping in view the scheme of the act. 15. Finally, the assessee’s appeal succeeds on merits. The revenue is directed to grant the deduction so claimed by the assessee and re- compute assessee’s income. 16. The appeal stands allowed in terms of our above order.

Order pronounced on 23rd February, 2022.

Sd/- Sd/- (V. DURGA RAO) (MANOJ KUMAR AGGARWAL) �ाियक सद� /JUDICIAL MEMBER लेखा सद� / ACCOUNTANT MEMBER

चे�ई / Chennai; िदनांक / Dated : 23-02-2022 EDN/- आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त (अपील)/CIT(A) 4. आयकर आयु�त/CIT 5. �वभागीय ��त�न�ध/DR 6. गाड� फाईल/GF