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Income Tax Appellate Tribunal, PUNE“B” BENCH, PUNE
Before: SHRI SS VISWANETHRA RAVI & SHRI G. D. PADMAHSHALI
ORDER PER G. D. PADMAHSHALI, AM; The appeal is assailed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [for short “NFAC”] dt. 22/06/2021 passed u/s 250 of Income-Tax Act, 1961 [for short “the Act”], which leapt out of an order of intimation passed u/s 143(1) of the Act, by Asstt. DIT, CPC-Bengaluru [for short “CPC”] dt. 14/05/2020, for assessment year [for short “AY”] 2019-2020. ITAT-Pune Page 1 of 6 Vaibhav Maruti Dombale
The solitary ground under the present appeal revolves around the allowability of deduction ₹57,92,151/- claimed 36(1)(va) towards payment of employee’s contribution of provident fund [for short “EPF”] and ESI etc., for the impugned assessment year.
The facts of the case emanating from records are that, the appellant an individual engaged in the business of providing manpower services beside deriving income from salaries, for the AY 2019-20 filed his Income Tax Return [for short “ITR”] on 05/10/2019 declaring total income of ₹1,19,20,710/- as against the CPC processed the said ITR u/s 143(1) determining total income at ₹1,77,12,870/- disallowing ₹57,92,151/-being the payment of EPF & ESI paid beyond due date prescribed under relevant Act, but before the due date of filing of ITR u/s 139(1) of the Act.
The assessee’s submission in an appeal before first appellate authority i.e. NAFC did not yield any relief, consequently the appellant is before the Tribunal seeking ITAT-Pune Page 2 of 6 Vaibhav Maruti Dombale 36(1)(va) is prospective in nature.
During the course of physical hearing, the learned representative of the assessee [for short “AR”] reiterated the factual matrix in support of claim, au contraire the learned departmental representative [for short “DR”] without controverting the facts that, the appellant has duly deposited EPF and ESI before the due date for filing the ITR u/s 139(1) of the Act, has relied upon the orders of authorities below for confirming the disallowance pressing into service the explanation 1 & 2 to section 36(1)(va) as amended by Finance Act, 2021.
After hearing to the rival contentions of both the parties; and subject to the provisions of rule 18 of Income Tax Appellate Tribunal Rules, 1963 [for short “ITAT, Rules”] perused the material placed on records and duly considered the facts of the case in the light of settled legal position and the case laws relied upon by the appellant assessee as well the respondent revenue.
ITAT-Pune Page 3 of 6 Vaibhav Maruti Dombale
In reaching the adjudication, it is apt to quote from notes on clause 8 to finance bill, which reads as; Clause 8 of the Bill seeks to amend section 36. . . . . Sub-section (1) . . . . . Clause (va) . . . . . Explanation 1 to the said clause provides that for the purposes of this clause, "due date" means the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued thereunder or under any standing order, award, contract of service or otherwise.
It is proposed to insert Explanation 2 to clause (va) of sub-section (1) of the said section so as to clarify 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 the said clause.
This amendment will take effect from 1st April, 2021 and will, accordingly, apply in relation to the assessment year 2021-2022 and subsequent assessment years. (Emphasis supplied)
The conjunctive reading of section 36(1)(va) r.w.s. 43B and the newly amended explanation 1 & 2 to section 36(1)(va), it shall be suffice to state that, the deduction towards payment of employee’s contribution to EPF/ESI etc., henceforth i.e. from AY 2021-2022 shall be available ITAT-Pune Page 4 of 6 Vaibhav Maruti Dombale 43B, resultantly the appellant’s claim of deduction made u/s 36(1)(va) r.w.s. 43B for the impugned AY falls anterior, thus protected by the decision of Hon’ble Apex Court in case of “CIT Vs Alom Extrusions Ltd.” reported in 319 ITR 306 and by the jurisdictional High Court of Bombay in “CIT Vs Ghatge Patil Transport Ltd.”reported at 368 ITR 749.
In the light of above, the impugned NFAC order is set- aside and Ld. AO / CPC is directed to allow the deduction u/s 36(1)(va) as claimed in the return of income.
Resultantly, the appeal of the appellant assessee is allowed in aforestated terms. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Monday 05th day of September, 2022. -S/d- -S/d- SS VISWANETHRA RAVI G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE ; दिन ांक / Dated : 05thday of September, 2022. ITAT-Pune Page 5 of 6 Vaibhav Maruti Dombale आदेश की प्रधिधलधप अग्रेधिि / Copy of the Order forwarded to : 1.अपील र्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The Pr. CIT, Pune (Mh-India) 4. The CIT, Pune (Mh-India) 5. दिभ गीय प्रदिदनदि,आयकरअपीलीय न्य य दिकरण, पुणे “बी” बेंच, पुणे / DR, ITAT, Pune “B” Bench, Pune. 6. ग र्डफ़ इल / Guard File. आिेश नुस र / BY RDER, िररष्ठ दनजी सदचि / Sr. Private Secretary आयकर अपीलीय न्य य दिकरण, पुणे / ITAT, Pune.
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