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Income Tax Appellate Tribunal, ‘A’ BENCH, KOLKATA
Before: Shri Rajpal Yadav, Vice-(KZ) & Shri Rajesh Kumar
Per Bench:- The appeals at Sr. Nos. 1 to 5 in the Cause Title were heard on 7th March, 2022, whereas the appeals at Sr. Nos. 6 to 8 in the Cause Title were heard on 8th March, 2022. The only issued involved in all these appeals is whether the assessees are entitled for deduction of employees’ contribution paid before the due date of filling of the return.
ITA No. 539/KOL/2021(AY-2018-19)-Deloitte Haskins & Sells Management Services Ltd. ITA No. 546/KOL/2021(AY-2017-18)-Fives Stein India Projects (P) Ltd. ITA No. 561/KOL/2021(AY-2019-20)-Rydak Syndicate Ltd. ITA No. 564/KOL/2021(AY-2019-20)-Bharat Industries ITA No. 483/KOL/2021(AY-2019-20)-Saha Textile ITA No. 489/KOL/2021(AY-2019-20)-Vishva Electrotech Ltd. ITA No. 588 & 589/KOL/2021(AY-2015-16 & 19-20)-Kanchan Vanijya Pvt. Ltd.
With the assistance of ld. representatives, we have gone through the record carefully. It revealed from the record that these appellants failed to make the payments of employees’ contribution to ESI & PF account within the due date provided under the PF & ESI Act. Therefore, the ld. Assessing Officer has disallowed the claim of assessees for grant of deduction of such contributions. This disallowance was made with the aid of section 36(1)(va) read with section 2(24)(x) of the Income Tax Act. Before us, it was contended that the issue in dispute is squarely covered by the judgment of the Hon’ble Calcutta High Court in the case of (i) CIT – vs.- Vijayshree Ltd. in ITAT No. 243 of 2011 & GA No. 26607 of 2011;(ii) CIT –vs.- Philips Carbon Black Ltd. in GA No. 1382 of 2014 & ITAT 31 of 2014; (iii) CIT –vs.- M/s. Coal India Ltd. in ITA 12 of 2015 and (iv) M/s. Akzo Nobel India Ltd. –vs.- CIT in of 2011. This aspect has been considered by the Coordinate Bench in the case of Lumino Industries Ltd. –vs.- ACIT (ITA No. 231 & 365/KOL/2021). On the other hand, ld. Sr. D.R. has contended that section 36(1)(va) as well as section 43B has been amended by the Finance Act, 2021, whereby Explanation (2) has been attached with section 36(1)(va). As per this Explanation, it has been provided that 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. He filed a written note in this connection, which we have gone through.
On due consideration of the above facts and circumstances, we find that ITAT, Kolkata has duly examined the amendment brought in by virtue of Finance Act, 2021. On the proposition and the discussion made by the ITAT in the case of Lumino Industries Limited & Others read as under:- “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 Haskins & Sells ITA No. 542/KOL/2021(AY-2012-13)-Karuna Management Services Ltd. ITA No. 546/KOL/2021(AY-2017-18)-Fives Stein India Projects (P) Ltd. ITA No. 561/KOL/2021(AY-2019-20)-Rydak Syndicate Ltd. ITA No. 564/KOL/2021(AY-2019-20)-Bharat Industries ITA No. 483/KOL/2021(AY-2019-20)-Saha Textile ITA No. 489/KOL/2021(AY-2019-20)-Vishva Electrotech Ltd. ITA No. 588 & 589/KOL/2021(AY-2015-16 & 19-20)-Kanchan Vanijya Pvt. Ltd.
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 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 ofdetermining the due date under this clause. For ready reference, we reproduce the Explanation-2 to Section 36(1 )(va) as under: “Section 36(1 )(va) Explanation-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 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 ITA No. 539/KOL/2021(AY-2018-19)-Deloitte Haskins & Sells Management Services Ltd. ITA No. 546/KOL/2021(AY-2017-18)-Fives Stein India Projects (P) Ltd. ITA No. 561/KOL/2021(AY-2019-20)-Rydak Syndicate Ltd. ITA No. 564/KOL/2021(AY-2019-20)-Bharat Industries ITA No. 483/KOL/2021(AY-2019-20)-Saha Textile ITA No. 489/KOL/2021(AY-2019-20)-Vishva Electrotech Ltd. ITA No. 588 & 589/KOL/2021(AY-2015-16 & 19-20)-Kanchan Vanijya Pvt. Ltd.
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 favor 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”.
A perusal of the above would reveal that the ITAT, Kolkata has specifically propounded that if employees’ contribution received by an assessee and paid to ESI and PF accounts before the due date of filing of the return, then the assessee will be eligible to claim the deduction of such amounts. With the assistance of ld. representatives, we have specifically gone through each case and find that payments have been made within the due dates of filing of the return except in ITA No. 483/KOL/2021. In this case also, a claim has been made that payment was made within the due date of filing of the return. But no details were submitted before the lower authorities and for buttressing this contention, for the first time an audit report is being placed before us exhibiting the payment made before the due date of filing of the return. We confronted the ld. counsel for the assessee with regard to the above Haskins & Sells ITA No. 542/KOL/2021(AY-2012-13)-Karuna Management Services Ltd. ITA No. 546/KOL/2021(AY-2017-18)-Fives Stein India Projects (P) Ltd. ITA No. 561/KOL/2021(AY-2019-20)-Rydak Syndicate Ltd. ITA No. 564/KOL/2021(AY-2019-20)-Bharat Industries ITA No. 483/KOL/2021(AY-2019-20)-Saha Textile ITA No. 489/KOL/2021(AY-2019-20)-Vishva Electrotech Ltd. ITA No. 588 & 589/KOL/2021(AY-2015-16 & 19-20)-Kanchan Vanijya Pvt. Ltd. fact, then he informed us that basically the return of the assessee was processed at CPC, Bengaluru, wherein without asking for any explanation from the assessee, the disallowance was made. Before the ld. CIT(Appeals), it could not submit the details. Thus in a faceless disposal of appeal, the disallowance of Rs.4,99,233/- was confirmed by the ld. 1st appellate authority. We set aside the impugned orders in this appeal for a limited purpose to the file of ld. Assessing Officer. Ld. Assessing Officer shall verify, whether payments to ESI and PF accounts out of employees’ contribution has been made within the due date of filing of return or not. In case, it is found that payments of these contributions have been made within the due date of filing of the return, then no disallowance ought to be made. With the above observation, this appeal is to be treated as allowed for statistical purposes, whereas all other appeals are treated as allowed. The disallowance stands deleted in all other appeals.
In the result, is allowed for statistical purposes, whereas all other appeals of the assessees are allowed. Order pronounced in the open Court on March 9th, 2022.
Sd/- Sd/- (Rajesh Kumar) (Rajpal Yadav) Accountant Member Vice-President (KZ) Kolkata, the 9th day of March, 2022 Copies to : (1) Deloitte Haskins & Sells, 13 & 14 th Floor, Building Omega, Bengal Intelligent Park, B.lock-EP & GP, Sector-V, Salt Lake City, Kolkata-700091 (2) Karuna Management Services Limited, 207, C.R. Avenue, Meridian Plaza, 4th Floor, Girish Park, Kolkata-700006 (3) Fives Stein India Projects (P) Limited, ITA No. 539/KOL/2021(AY-2018-19)-Deloitte Haskins & Sells Management Services Ltd. ITA No. 546/KOL/2021(AY-2017-18)-Fives Stein India Projects (P) Ltd. ITA No. 561/KOL/2021(AY-2019-20)-Rydak Syndicate Ltd. ITA No. 564/KOL/2021(AY-2019-20)-Bharat Industries ITA No. 483/KOL/2021(AY-2019-20)-Saha Textile ITA No. 489/KOL/2021(AY-2019-20)-Vishva Electrotech Ltd. ITA No. 588 & 589/KOL/2021(AY-2015-16 & 19-20)-Kanchan Vanijya Pvt. Ltd.
Saberwal House, 5t h Floor, 55B, Mirza Ghalib Street, Kolkata-700016
(4) Rydak Syndicate Ltd. 4, Jardines, Dr. Rajendra Prasad Sarani, Kolkata-700001
(5) Bharat Industries, Brojonath Lahiri lane, Santragachi, Howrah-711104 (6) Saha Textile, 29, Saha textile, K.B. Bose Road, Barasat, Kolkata-700124 (7) Vishva Electrotech Limited, Unit 8B & 8C, 23, Circus Avenue, Kolkata-700017 (8) Kanchan Vanijya Pvt. Limited, 13/3, Mahendra Roy Lane, Kolkata-700046 (9) Additional Director of Income Tax,CPC, Bengaluru