DANISH PRIVATE LIMITED,JAIPUR vs. INCOME TAX OFFICER WARD-6(1), JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Jh lanhi xkslkbZ] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No.256/JP/2022 fu/kZkj.k o"kZ@Assessment Year : 2019-20 cuke M/s.Danish Private Limited The ITO F-680, Sitapura Industrial Area Vs. Ward 6 (1) Jaipur Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AABCD 0834B vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Ms. Ruchika Sogani, Advocate jktLo dh vksj ls@ Revenue by: Smt. Runi Pal, Addl. CIT lquokbZ dh rkjh[k@ Date of Hearing : 21/07/2022 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 26/07/2022 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal filed by the assessee is directed against order of the ld. CIT(A) dated 26-05-2022, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2019-20 wherein the assessee has raised the following grounds of appeal. (1) In the facts and circumstances of the case and in law the ld. CIT(A) has erred in confirming the action of the AO in making adjustment in the intimation u/s 143(1) which are outside the purview of Section 143(1)(a). The

2 ITA NO. 256/JP/2022 DANISH PRIVATE LTD. VS ITO, WARD 6(1), JAIPUR action of the ld CIT(A) is illegal, unjustified, arbitrary and again the facts of the case. Relief may please be granted by deleting the entire disallowance of Rs.3,38,962/-. (2) In the facts and circumstances of the case and in law, ld.CIT(A) erred in confirming the action of the AO in making disallowance of Rs.3,38,962/-. in respect of ESIC and PF u/s 36(1)(va) of Income Tax Act, 1961. The action of the ld CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the disallowance of Rs.3,38,962/-. .

2.1 Apropos Ground Nos. 1 and 2, brief facts of the case are that the assessee company is engaged in the business of manufacturing of transformers. During the relevant previous year, the assessee company filed its return of income on 30-10- 2019 declaring total income of Rs,5,59,21,157/-. The Assistant Director of Income Tax, CPC, Bengaluru (in short ‘’the AO’’) while making the assessment passed the order u/s 143(1) of the Act on 10-05-2020 and made addition/ disallowance of Rs.1,00,000/- u/s 43B, Rs.3,38,362/- on account of delay in deposit of employees share of ESI and PF u/s 36(1)(va) of the I.T. Act, Rs.11,021/- u/s 37 of the I.T. Act and giving lesser credit of TDS by Rs.65,055/-. It is worthwhile to mention here that the assessee is in appeal before us only as regards the limited issue of late deposit of ESI/PF share of the employees. 2.2 Aggrieved by the order of the AO as regards the issue of ESI/PF, the assessee carried the matter before the ld. CIT(A)-NFAC, Delhi who confirmed the action of the AO by observing as under:-

3 ITA NO. 256/JP/2022 DANISH PRIVATE LTD. VS ITO, WARD 6(1), JAIPUR ‘’5.7 ( r) However, this amendment has also been the subject matter of litigation and few benches of ITAT have decided the issue as to whether the amendments made to Section 36(1)(va) and Section 43B are retrospective or prospective in nature. The Hyderabad ITAT in the case of M/s Crescent Roadways Private Ltd. In ITA No. 1952/Hyd/2018 in its decision has relied upon the Memorandum of Explanation and held that amendments to Section 36(1)(va) and 43B would apply with effect from 01-04-2021 and not to earlier years. The ITAT Jodhpur Bench in the case of Mohangarh Engineers & Constructions Co. in its decision dated 12-08-2021 has also held that the amendments made to Finance Act shall be prospective only. However, the ITAT Delhi Bench in the case of M/s., Vedavan Consultants Pvt. Ltd. in its decision dated 26-08-2021 has held that the amendments are clarification in nature and hence applicable to earlier years also.

(s) In the instant case, the appellant has not brought on record any decision of the jurisdictional Courts on the issue of the amendments being clarificatory or not.

(t) In view of the discussion above, it can be safely concluded that the clarificatory amendment brought out by the Finance Act, 2021 will be applicable to the issue in the instant appeal also. It is also clear 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 the taxpayer is entitled to deduction in respect of te sum belatedly paid towards such contribution, especially when such sum is admittedly a sum received by the taxpayer / employer from his employee. Therefore, for considering such question, application of Section 36(1)(va) read with section 2(24(x) alone is the proper course and any other interpretation would only defect the object and scope of both the provisions viz. 43B and 36(1)(va). If the payment was not done within the stipulated time prescribed under the relevant enactment, the benefit of deduction cannot be claimed, since such belated payment is not a valid payment to attract deduction, under the purview of the Income Tax Act.

(u) Considering the totality of the facts and circumstances of the case, the disallowance of Rs.3,38,362/- on the above account is confirmed. The Ground No. 4 is dismissed.’’

4 ITA NO. 256/JP/2022 DANISH PRIVATE LTD. VS ITO, WARD 6(1), JAIPUR 2.3 As regards the delay in deposit of Employee Contribution to PF/ESI, the ld. AR of the assessee contended that assessee had paid employees contribution of PF and ESIC, though beyond due date(s) under respective Acts but prior to due date of filing the Return of income under sec. 139(1) of IT Act, the payments cannot be disallowed u/s 43B of the Act. To this effect, the ld. AR of the assessee prayed that similar issues have been decided by this Bench in favour of the assessee in various cases. 2.4 On the other hand, the ld. DR strongly supported the order of the ld.CIT(A). 2.5 We have heard both the parties and perused the materials available on record. The Bench observed that the issue of late deposit of PF/ESI contribution by the assessee but before filing the due date of filing of the return, is covered by the decision of ITAT, Jaipur Bench dated 22-02-2020 in the case of Pratap Technocrats Private Ltd. And another vs ADIT,CPC, Bengaluru (ITA 18/JP/2022, 33/JP/2022, 24,25, & 26/JP/2022 wherein ITAT has held as under:- ‘’20. By considering the totality of the facts and the judicial pronouncements, we are of the view 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 provision of Section 43B r.w.s. 36(1)(va) of the Act are not applicable for the assessment year under consideration i.e. 2018-19 but will apply from

5 ITA NO. 256/JP/2022 DANISH PRIVATE LTD. VS ITO, WARD 6(1), JAIPUR assessment year 2021-22 and subsequent assessment years. Hence, this issue raised in assessee’s appeal is allowed.’’

Therefore, the we respectfully concur with the findings of the this Bench and the order of the ld. CIT(A) on the issue is reversed. Hence, the issue of PF/ESI of the assessee raised in Ground No.2 is allowed. The Ground No. 1 is general in nature which does not require any adjudication. 3. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on 26/07/2022. Sd/- Sd/-

¼lanhi xkslkbZ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Sandeep Gosain) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 26 /07/2022 *Mishra आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- M/s. Danish Private Limited, Jaipur 2. izR;FkhZ@ The Respondent- ITO, Ward -6 (1), Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 6. xkMZ QkbZy@ Guard File (ITA No. 256/JP/2022) vkns'kkuqlkj@ By order, सहायक पंजीकार@Aेेजज. त्महपेजतंत