Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, BENCH “B” KOLKATA
Before: Shri A.T. Varkey & Shri Girish Agrawal
आदेश /O R D E R Per Bench :
All the above mentioned appeals have been preferred by the respective assessee as captioned in the cause list against the separate orders dated 21-09-2021, 07-09-2021, 25-09-2021 and 23-09-2021 passed by the respective Commissioner of Income-tax
2. ITA No.475/Kol/21 A.Y 2018-19 Rajesh Kumar Mundhra A.Y 2018-19 Think Tel Solutions India P.Ltd ITA No. 515/Kol/21 A.Y 2019-20 Rekha Halder ITA No.518/Kol/21 A.Y 2019-20 R.B. Agarwalla & Co.
(Appeals), [in short, the ld. CIT(A)], National Faceless Appeal Centre (NFAC), Delhi, which in turn arise out of processing of return of income u/s. 154/143(1) of the Income-tax Act, 1961 ( in short, the ‘Act’) by the Assessing Officer, Deputy Commissioner of Income-tax, CPC, Bengaluru ( in short the AO) on 19-12-2019, Assessing Officer, DCIT, CPC, Bengaluru on 16-10-2019, Assessing Officer, Assistant Director of Income-tax, CPC, Bengaluru on 14-07-2020 and Assessing Officer, Assistant Director of Income-tax, CPC, Bengaluru on 05-09-2020 for the A.Ys 2018-19 and 2019-20, whereby a sum of Rs. 4,84,710/- towards ESI/PF, Rs. 29,82,294/- towards ESI,PF/Superannuation, Rs.16,41,330/- towards PF/ESI and Rs.5,08,778/- towards PF (Provident Fund) for respective assessees were disallowed/added back on account of delay on the part of the assessee in deposit of employees contribution to Provident Fund/Employees State Insurance ( hereinafter PF/ESI).
Since there are common grounds involved in all the captioned four appeals, we dispose of them by this consolidated order for the sake of convenience and brevity.
There is a delay of 30 days in filing the appeal vide and of 2 days in ITA No. 518/Kol/2021. Application for condonation of delay is placed on record explaining the cause for delay. Ld. DR did not object on the delay being reasonable. Accordingly, we condone the delay and take up these appeals for adjudication.
On perusal of grounds of appeal, it is revealed that all the appeals are mainly on the issue of disallowance made under the head of PF/ESI for delayed payment under section 36(1)(va) read with section 2(24)(x) and section 43B of the Act.
3. ITA No.475/Kol/21 A.Y 2018-19 Rajesh Kumar Mundhra A.Y 2018-19 Think Tel Solutions India P.Ltd ITA No. 515/Kol/21 A.Y 2019-20 Rekha Halder ITA No.518/Kol/21 A.Y 2019-20 R.B. Agarwalla & Co.
Facts briefly stated include that the assessee filed e-return of income for the A.Y under consideration, which was processed u/s.143(1) of the Act by DCIT, CPC, Bangalaru, whereby deposit of PF/ESIC disallowed/added back on account of failure of the assessee to deposit the employees contribution to PF/ESI beyond the due date. Admittedly, it was not paid on or before the prescribed due date u/s. 36(1)(va) r.w.s 2(24)(x) of the Act but paid before the due date of filing income tax return u/s. 139(1) of the Act. Relevant extracts from the Tax Audit Report (TAR) have been placed on record to demonstrate deposit of these amounts before the due date of filing of return. Aggrieved by the order of the Ld.AO, DCIT, CPC. Bangalore, the assessee preferred an appeal before the ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, The ld. CIT(A) considering the submissions of assessee and various case laws available in his order dismissed the appeal of assessee by confirming the said disallowance as made by the ld.AO.
Aggrieved by the above order of the ld. CIT(A), now the assessee is in appeal before us.
7. None appeared on behalf of assessee except Shri Arvind Agarwal, Advocate in ITA No.518/Kol/2021. However, after hearing the Ld. DR and perusing the case record and material available on record, we decided to dispose of the appeal on merits.
8. We noticed that the issue raised in the instant appeal regarding disallowance on delayed payment of employees’ contribution towards Provident Fund and ESI without following the provisions of section 2(24)(x) read with section 36(1)(va) of the Act, is squarely covered in favour of the assessee by the judgment of the Hon’ble Jurisdictional High Court, Calcutta in the case of Vijay Shree Ltd, of 2011(G.A No.2607 of 2011) dt. 12.8.2015. The issue in hand is covered in favour of 4. ITA No.475/Kol/21 A.Y 2018-19 Rajesh Kumar Mundhra ITA No.478/Kol/21 A.Y 2018-19 Think Tel Solutions India P.Ltd ITA No. 515/Kol/21 A.Y 2019-20 Rekha Halder ITA No.518/Kol/21 A.Y 2019-20 R.B. Agarwalla & Co. assessee by the latest order dt. 17-11-2021 of the Co-ordinate Bench of this Tribunal (ITAT, ‘B ‘Bench, Kolkata) in ITA Nos. 231,365,366,369,367,368 & 371/Kol/2021 for the AYs. 2015-16, ’17-18, ’18-19 & ’19-20 in the case of Lumino Industries & Ors. In support, reliance is also placed on the orders dt. 16-07-2021, 04-10-2021 and order dt. 11-02-2022, wherein the Co-ordinate Bench, ITAT, Kolkata on similar issue has allowed the appeal of assessee.
Smt. Ranu Biswas, Addl. CIT, the Ld. Departmental Representative ( in short, the Ld.DR) has not objected to the factual position of the case relating to the deposit of the contributions before the due date of filing of return for the year u/s. 139(1) of the Act . However, she submitted that the ld. AO has rightly disallowed the said disallowance and therefore, the ld. CIT(A) rightly dismissed the appeal of assessee by confirming the said disallowance.
After hearing the rival submissions and perusing the material available on record, we find that the issue in hand is covered in favour of assessee by the said order of Hon’ble Jurisdictional High Court, Calcutta in the case of Vijay Shree Ltd, of 2011(G.A No.2607 of 2011), dt. 12.8.2015 and order dt. 17-11-021 of this Tribunal in the case of Lumino Industries (supra). Relevant findings of the said order of the Co-ordinate Bench is reproduced herein below for the sake of clarity:-
“17. Have heard both the parties. We note that the Finance Bill, 2021 has brought in an amendment which disallows the employees' contribution made in PF and ESI if not made within the due date as prescribed by the respective statutes (PF and ESI Act). So after the amendment has been inserted according to Shri Miraj D Shah takes effect from 1st April, 2021 i. e AY 2021-22 and subsequent assessment year and if the remittance of PF/ESI Employees' Contribution is not made within the time prescribed by the PF/ESI Act then the remittance cannot be allowed as a deduction which is prospective in operation. Whereas according to Ld. CIT(A), the amendment brought in is clarificatory in 5. A.Y 2018-19 Rajesh Kumar Mundhra ITA No.478/Kol/21 A.Y 2018-19 Think Tel Solutions India P.Ltd ITA No. 515/Kol/21 A.Y 2019-20 Rekha Halder ITA No.518/Kol/21 A.Y 2019-20 R.B. Agarwalla & Co. nature so, retrospective in operation. So we have to adjudicate this issue whether the amendment brought in by Finance Act, 2021 is prospective or retrospective in operation. We note that before this amendment has been inserted by Finance Bill, 2021, the Hon'ble Jurisdictional Calcutta High Court in the case of Shri Vijayshree Ltd. Ltd.(supra), M/s Philips Carbon Black Ltd.(supra), M/s Coal India Ltd.(supra), M/s Akzo Nobel India Ltd. (supra) has held that the payment of employees' contribution if made by an assessee before the due date of filing of return of income u/s 139(1) of the Act, is allowable as a deduction. We note that by Finance Act, 2021, the provision of Section 36(1)(va) as well as Section 43B has been amended to this extend by inserting the Explanation 2 whereby it is clarified that the provision of Section 43B shall not apply and shall be deemed never to have been applied for the purpose of determining the date under this clause. For ready reference, we produce the Explanation-2 to Section 36(1)(va) as under:
“Section 36(1)(va)
Explnation-2-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 purpose of determining the ‘due date’ under this clause’.
We find that this amendment has been brought in the Act to provide certainty about the applicability of Section 43B in respect of belated payment of employees' contribution. In order to test whether the amendment brought in later is retrospective or not one has to apply the test as laid by the Hon'ble Supreme Court in the case of M/s Snowtex Investment Ltd. (supra) wherein the Hon'ble Supreme court took note of the law laid down on this issue by the Constitution Bench in M/s Vatika Township Ltd. and held that the intent of the Parliament/legislature need to be looked into for ascertaining whether the amendment should be retrospective or not. In Vatika Township Ltd. (supra) the Hon'ble Supreme Court held that the notes on clauses appended to the Finance Bill will throw light as to the legislative intent; because it has to be borne in mind that Parliament/legislature is aware of three concepts before an amendment is brought in, which can be discerned from reading of the "Notes on Clauses" to the Bill which are (i) prospective amendment with effect from a fixed date; (ii) retrospective amendment with effect from a fixed anterior date; and (iii) clarificatory amendments which are retrospective in nature. So when we adjudicate whether the view of Ld CIT(A) that the explanation 2 brought in by 6. A.Y 2018-19 Rajesh Kumar Mundhra ITA No.478/Kol/21 A.Y 2018-19 Think Tel Solutions India P.Ltd ITA No. 515/Kol/21 A.Y 2019-20 Rekha Halder ITA No.518/Kol/21 A.Y 2019-20 R.B. Agarwalla & Co.
Finance Act, 2021 is retrospective, let us look at the "Notes on Clauses and the relevant clauses 8 & 9 of the Finance Bill, 2021 (supra) pertaining to the issue in hand which in clear and unambiguous terms spells out the intention of Parliament that the amendment shall take effect from 1st April, 2021 and therefore will accordingly apply to Assessment Year 2021-22 and subsequent years. So since the legislative intent is clear, the amendment brought in by Finance Act, 2021 on this issue as discussed is prospective and Ld. CIT(A) erred in holding otherwise. So till AY 2021-22, the Jurisdictional High Court's view in favour of assessee will hold good and is binding on us. As discussed the decision of the Hon'ble Delhi High Court in Bharat Hotels Ltd. (supra) which was in favor of revenue has not considered the decision of the Co-ordinate Division Bench decision in M/s Aimil Ltd.(supra) which is in favour of assessee. So we note that later decision of the Delhi/Hyderabad Tribunal have followed the decision favouring assessee in the light of the Hon 'ble Supreme Court decision in M/s Vegetable Products (supra). In the light of the aforesaid decision and relying on the ratio of the Hon'ble Supreme Court in the case of Vatika Township Pvt. Ltd. (supra) and M/s Snowtex Investment Ltd. (supra) and also taking note of the binding decision of the Hon 'ble Jurisdictional Calcutta High Court on this issue before us in Shri Vijayshree Ltd. Ltd.(supra), M/s Philips Carbon Black Ltd.(supra), M/s Coal India Ltd.(supra), M/s Akzo Nobel India Ltd. (supra), we set aside the impugned order of Ld CIT(A) and direct the AO to allow the claim of deduction in respect of employees contribution shares towards ESI, PF, by the assessee before the due date of filing of return u/s 139( 1) of the Act. Therefore the appeal of assessee succeeds and so, it is allowed in favor of assessee. “
Considering the uncontroverted factual matrix on record about the deposit of the contributions before the due date of filing of return u/s. 139(1) of the Act and respectfully following the above decision of the Hon’ble Jurisdictional High Court, the disallowance made by the ld.AO and confirmed by the ld. CIT(A) is hereby deleted. Grounds raised by the assessee are allowed in all the four appeals before us through this consolidated order. Accordingly, all the four appeals are allowed.
ITA No.475/Kol/21 A.Y 2018-19 Rajesh Kumar Mundhra A.Y 2018-19 Think Tel Solutions India P.Ltd ITA No. 515/Kol/21 A.Y 2019-20 Rekha Halder ITA No.518/Kol/21 A.Y 2019-20 R.B. Agarwalla & Co.
In the result, all the appeals of the respective assessee are allowed Order is pronounced in the open court on 06 April, 2022 Sd/- Sd/- ( A.T.VARKEY ) (GIRISH AGRAWAL) Judicial Member Accountant Member
Dated:06 -04-.2022 **PP. Sr. PS Copy of the order forwarded to: 1.Assessee – (1) Rajesh Kumar Mundhra, 100 Sovabazar Street, Sovabazar, 2nd Floor, Kolkata-700 005 (2) M/s.Think Tel Solutions India (P) Ltd. 1939 Rajdanga Main Road, Kasba, Kolkata-700107,(3) Rekha Halder, Musalman Para,Baruipur-700144 and (4) M/s. R.B Agarwalla & Co.Suite-606, Central Plaza, 2/6 Sarat Bose Road, Minto Park, Kolkata-700 020. 2.Revenue – DCIT, CPC, Bangaluru/ ITO, Ward 10(2), Kolkata, Aaykar Bhavan, P-7 Esplanade, Chowringhee Square, Kolkata-700069./ ADIT, CPC, Bengaluru 48/1, 48/2 Beratenangrahara Begur, Hosur Rd, Karnataka-560100/ ADIT, CPC, Bengaluru. 3.CIT, Kolkata. 4.CIT(A) 5.DR, ITAT, Kolkata, (sent through e-mail).. True Copy By Order Assistant Registrar ITAT, Kolkata Bench, Kolkata
ITA No.475/Kol/21 A.Y 2018-19 Rajesh Kumar Mundhra A.Y 2018-19 Think Tel Solutions India P.Ltd ITA No. 515/Kol/21 A.Y 2019-20 Rekha Halder ITA No.518/Kol/21 A.Y 2019-20 R.B. Agarwalla & Co.