SMT. ASHMI GUPTA,LUDHIANA vs. ITO, WARD VI(1), LUDHIANA

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ITA 23/CHANDI/2022Status: DisposedITAT Chandigarh11 April 2022AY 2018-195 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal condoned the delay in filing the appeal. It held that the amendment to Section 36(1)(va) and Section 43B of the Income Tax Act by the Finance Act, 2021, is prospective, not retrospective. Therefore, the disallowance made on this basis was deleted.

What were the facts?

The assessee filed an appeal with a delay of 11 days due to a suspected COVID-19 case in the Chartered Accountant's office. The appeal concerned the disallowance of delayed payments of employees' contribution to ESI and PF.

What were the issues?

Whether the amendment to Section 36(1)(va) and Section 43B by the Finance Act, 2021, is retrospective, and if disallowance of employees' ESI/PF contribution paid after the due date but before the return filing date is valid.

Which sections of the Income-tax Act were involved?

Section 36(1)(va),Section 43B,Section 143(1),Section 139(1),Section 250

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Cases cited in this judgment(2)Show list

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आदेश/Order

1.

The present appeal has been filed by the assessee against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi, (in short referred to as CIT(A) dated 21.11.2021 relating to A.Y. 2018-19, passed u/s 250 of the Income Tax Act,1961(hereinafter referred to as “Act”).

2.

A perusal of the record shows that there is a delay of 11 days in filing the appeal before the Tribunal. The assessee has filed an application for condonation of delay in filing the appeal. The contents of the said application are reproduced hereunder :

The Hon'ble Bench, Income Tax Appellate Tribunal, Chandigarh Benches, Chandigarh -2022 A.Y. 2018-19 Page 2 of 5

Subject: - Request regarding Condonation of Delay Reference: - Appeal No. ITA23/CHANDI/2022 - In the case of Ashmi Gupta, A.Y. 2018-19

Respected Sir, The Hon'ble Commissioner of Income Tax (Appeals), National Faceless Assessment Centre, Delhi has passed the order on 21.11.2021 i.e. Sunday Therefore the appeal was required to be filed before your honour by 24.01.2022. The appeal is filed on 31.01.2022, thus there is a delay of 11 days in filing the appeal, as the concerned person in the office of our Chartered Accountant was on suffering from suspected Covid. This delay is purely on account of preparing the appeals without having any mala-fide intention, thus requested to condone the delay. We are filing the Affidavit in this regard. Submitted Yours faithfully, Sd/- (Ashmi Gupta) Assessee 3. Ld. DR had no objection to the condonation of delay.

4.

I have heard the rival contentions and gone through the application for condonation of delay. In view of the aforesaid facts and circumstances, I am convinced that the delay in filing the appeal is un-intentional but due to the aforesaid factors as pleaded above. In view of this, the delay in filing of the appeal is hereby condoned and now I proceed to decide the appeal on merits.

5.

The solitary issue in the present appeal relates to the addition made to the income of the assessee in the intimation made u/s 143(1) of the Act, by disallowing delayed payments of employees contribution to ESI and PF amounting to Rs.407,240/- by invoking the provisions of section 36(l)(va) of the Act. -2022 A.Y. 2018-19 Page 3 of 5

6.

The Ld. Commissioner of I.Tax (A) upheld the addition on the basis of the amendment effected by the Finance Act, 2021, to section 43B of the Act by insertion of Explanation-5 and to section 36(l)(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(l)(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 to be clarificatory and hence retrospective in application.

Accordingly, the contention of the Ld. Counsel for the assessee that the issue already stood decided in its favour by the Hon'ble Jurisdictional High Court in the case of CIT vs. M/s Lakhani Rubber Udyog (P) Ltd of 2010 dt 22.09.2015 & CIT vs Nuchem Ltd (2015) 371 ITR 164(P&H), was brushed aside and the addition upheld.

7.

This issue has been dealt with and adjudicated by the ITAT in a number of cases, consistently ruling in favour of the assessee, holding that the amendment to section 43B of the Act by insertion of Explanation-5 and to section 36(l)(va) of the Act by insertion of Explanation-2,by the Finance Act 2021 is prospective and the issue otherwise stands decided by the jurisdictional high court in favour of the assessee. In the case of Ajay Piplani Vs Assistant Director of Income Tax, CPC, Bengaluru in ITA No. -2022 A.Y. 2018-19 Page 4 of 5 114/CHD/2021 order dated 04.10.2021the issue has been adjudicated at para 5 to 7 of the order as under :

“5. We have heard both the parties. It is not denied that the employees contribution to ESI and PF was allowable and claimed as deduction by the assessee on the strength of various decisions of the jurisdictional 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(l)(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.

6. We have gone through the orders of the coordinate Benches of the ITAT cited by the Ld.Counsel for the assessee before us and have noted that it has been consistently held that the amendment to section 36(l)(va) and u/s 43B of 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(l)(va)/43B of the Act. Moreover it is an admitted position that the jurisdictional 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 jurisdictional High Court has held so in the following cases: 1) CIT Vs. Nuchem Limited, of 2009 2) CIT Vs. Hemla Embroidery Mills Pvt. Ltd.(2014), 366 ITR167 7. In view of the above, we hold that the claim of employees contribution to ESI and PF as per section 36(l)(va) of the Act cannot be denied in the impugned year, 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. 18,21,088/- is therefore set aside and the AO is directed to allow the claim of the assessee.” On similar lines the issue has been adjudicated in favour of the assessee in the case of M/s.Jupiter Aqua Lines Pvt. Ltd vs DCIT,Circle 6(1)

Mohali in dated 27th August 2021.

8.

In view of the aforestated decisions of the ITAT, therefore the contention of the Ld.DR before me that the amendment to section 36(1)(va) -2022 A.Y. 2018-19 Page 5 of 5 of the Act is retrospective is dismissed. Also since no facts distinguishing the present cases from those decided by the ITAT have been pointed out by the Ld.DR before me and admittedly the amounts of employees’ contribution to ESI and PF stood paid before the due date of filing of return of income, the issue of disallowance on account of delayed payments of employees’ contribution to ESI and PF is squarely covered by the aforesaid decisions, following which the disallowance made of ESI/PF employees’ contribution u/s 36(1)(va) amounting to Rs. 407,240/- is deleted.

9.

In the result, the appeal of the assessee is allowed. Order pronounced in the Open Court on 11th April, 2022.

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