NIRMAL KUMAR BARDIYA,JAIPUR vs. ACIT, CIRCLE-1, JAIPUR, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Jh lanhi xkslkbZ] U;kf;d lnL; ,oaJh 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. 260 /JP/2021 fu/kZkj.k o"kZ@Assessment Year : 2017-18 Shri Nirmal Kumar Bardiya cuke ACIT Vs. 24, Bardiya Colony, Museum Road Circle-1 Jaipur Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABAPB 9576 F vihykFkhZ@Appellant izR;FkhZ@Respondent vk;dj vihy la-@ITA No. 261/JP/2021 fu/kZkj.k o"kZ@Assessment Year : 2019-20 cuke Shri Nirmal Kumar Bardiya ADIT, CPC Bengaluru 24, Bardiya Colony, Museum Road Vs. Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABAPB 9576 F vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by : Shri S.R. Sharma, CA & Shri R.K. Bhatra, CA jktLo dh vksj ls@Revenue by: Smt. Runi Paul, Addl. CIT lquokbZ dh rkjh[k@Date of Hearing : 13/04/2022 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 05/05/2022 vkns'k@ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM Both these appeals by the assessee are directed against two different orders of the ld. CIT(A) dated 28-09-2021, National Faceless Appeal Centre, Delhi

2 ITA 60/JP/2021 Nirmal Kumar Bardiya vs ACIT, Circle-1, Jaipur [ hereinafter referred to as (NFAC) ] for the assessment year 2017-18 & 2019-20 respectively. 2. The hearing of the appeals was concluded through video conference by both the parties in view of the prevailing situation of Covid-19 Pandemic. 3. The grounds of appeal raised by the assessee in the above mentioned appeals are as under:- Assessment Year 2017-18 ‘’1. That on the facts and in the circumstances of the case, the ld. CIT(A) is wrong, unjust and has erred in law in upholding the disallowance by the AO of employees contribution to PF amounting to Rs.3,42,412/- u/s 36(1)(va) r/w sec. 2(24)(x) of the IT Act, 1961 on the ground that it was deposited after due date. 2. That without prejudice to the Ground No. (1), the ld. CIT(A) is further wrong and has erred in law in not accepting contention of the appellant that explanation 2 to section 36(1)(va) introduced by the Finance Act, 2021 is prospective in nature and, therefore, disallowance confirmed by the ld. CIT(A) on this account for A.Y. 2017-18 is wrong and bad in law.. Assessment Year 2019-20 ‘’1. That on the facts and in the circumstances of the case, the ld. CIT(A) is wrong, unjust and has erred in law in upholding the disallowance by the AO of employees contribution to PF amounting to Rs.4,31,441/- u/s 36(1)(va) r/w sec. 2(24)(x) of the IT Act, 1961 on the ground that it was deposited after due date. 2. That without prejudice to the Ground No. (1), the ld. CIT(A) is further wrong and has erred in law in not accepting

3 ITA 60/JP/2021 Nirmal Kumar Bardiya vs ACIT, Circle-1, Jaipur contention of the appellant that explanation 2 to section 36(1)(va) introduced by the Finance Act, 2021 is prospective in nature and, therefore, disallowance confirmed by the ld. CIT(A) on this account for A.Y. 2019-20 is wrong and bad in law..

3.1 During the course of hearing, the Bench noted that since grounds of appeal of the assessee are common in both the appeals, therefore, the Bench decided to dispose off firstly the appeal of the assessee for the A.Y. 2017-18. 4.1 The main issue arises in this appeal of the assessee is regarding disallowance of employee’s contribution of PF deposited belatedly but before due date of filing of return of income U/s 139(1) of the Income Tax Act, 1961 (in short, the Act). 4.2 The assessee filed its return of income on 29.09.2017 which was processed u/s 143(1) of the Act whereby an adjustment was made on account of disallowance of claim of deduction with respect to employees’ contribution towards PF deposited belatedly. During the course of assessment proceedings, the ACIT, Circle-1, Jaipur (for short ‘’AO’’) confirmed the disallowance of Rs.3,42,412/- on account of late deposit of employees contribution towards PF. The assessee challenged the said adjustment before the ld. CIT(A)/NFAC and contended that as per the binding precedents if the payment is made in the government account before due date of filing of return of income U/s 139(1) of the Act then as per provisions of Section 43B of the Act, no disallowance is made. The ld. CIT(A)/NFAC did not accept this contention of the assessee and confirmed the

4 ITA 60/JP/2021 Nirmal Kumar Bardiya vs ACIT, Circle-1, Jaipur disallowance by considering the amendment in Section 36(1)(va) of the Act whereby an explanation (2) as well as explanation (5) to Section 43B of the Act was inserted being retrospective in nature. 4.3. The Hon'ble Rajasthan High Court as well as other Hon'ble High Courts are consistently holding that where 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. The assessee contended that avoiding the binding nature of judgments, the AO was not justified in making addition of Rs.3,42,412/- which was paid before due date of filing of Return of Income and in rejecting application. 4.4 The matter was carried to ld. CIT(A)/NFAC by the assessee and the grounds appeal of the assessee is not allowed by the ld. CIT(A)/NFAC on the issue in question and the decision of the Jurisdictional High court is not considered while passing the order by the ld. CIT(A)/ NFAC. The relevant paras 3.0 to 3.4 of ld. CIT(A)/NFAC order dismissing the grounds of appeal of the assessee on the issue in question are as under:- ‘’3.0 ………..I have gone through the assessment order, the submission of the appellant and the relevant case laws in this regard. 3.1 Before discussing the above issue, it is noteworthy to produce the language for deduction of contribution to

5 ITA 60/JP/2021 Nirmal Kumar Bardiya vs ACIT, Circle-1, Jaipur PF, ESIC etc. u/s 36(1)(va) and 43B of the I.T. Act, 1961:- ‘’Section 36(1)(va) provides for deduction of sum received by the taxpayer from his employees as contribution to any provident or superannuation or any other fund, if such sum is deposited by the taxpayer to the relevant fund or before the due date. The ‘due date’ means the date before which the employer is required to deposit the employee’s contribution under the relevant fund under any Act, rule, order, notification issued thereunder etc. 3.2 In certain cases such as Karnataka High Court in the case of Essae Teroka (P) Ltd. vs DCIT (366 ITR 408), Rajasthan HC in case of PCIT vs Rajasthan State Beverages Cor. Ltd (2017) 84 taxmann.com 173, Bombay HC in case of Geekay Security Service vs DCIT (2019) 101 taxmann.com 192, courts had applied provisions of Section 43B and allowed the deduction of employee’s contribution under section 36(1)(va), which is paid by the taxpayer employer after the said due date but before the date of filing of return under section 139(1). The employee’s contribution is employees’ own money and the employer deposits the contribution on behalf of the employee, there is a case for enrichment. In turn, the employees are denied interest on their monies. The tax authorities are of the view that section 36(1)(va) was inserted vide the Finance Act, 1987 as a measure for penalizing employers, who mis-utilize employee’s contribution. 3.3 Explanation 2 to section 36(1)(va) has now been inserted to clarify that the provisions of Section 43B shall not apply and shall be deemed to have applied for the purpose of determining the ‘due date’. Further, the newly inserted explanation 5 to Section 43B also clarifies that the provisions of the said section do not apply and deemed to never have been applied to a sum received by

6 ITA 60/JP/2021 Nirmal Kumar Bardiya vs ACIT, Circle-1, Jaipur the taxpayer from any of his employees to which provisions of section 2(24)(x) apply. This would bring to an end the litigation on the subject. In the recent amendment in the said sections, it is clearly mentioned that the said amendment take effect form 01- 04-2021 i.e. A.Y. 2021-22 though it would have retrospective effect in view of the proposed deeming provisions. 3.4 In the light of the latest amendments, the plea of the appellant is not maintainable and is accordingly hereby rejected and the addition so made by the AO is hereby confirmed. Accordingly, these ground of appeal is hereby dismissed.’’

4.5 During the course of hearing, the ld. AR of the assessee prayed that ld, CIT(A)/NFAC has erred in confirming the addition of Rs.3,42,412/- on account of late payment of employees PF Contribution for which the ld. AR of the assessee has filed the following written submission, relying therein various case laws. ‘’It is submitted that the appellant deposited PF contribution made by employees a few days late but before due date of filing of return u/s 139 (1) as can be seen Ann. of Tax Audit report (copy enclosed). In law the PF/ESI contribution of employees allowable u/s 36 (1) (va) r.w.s. 43B of the Act, if the same are paid on or before due date of filing of return u/s 139 (1). The law on the issue is settled with the Supreme Court judgment in case of CIT Vs. Amil Ltd. & Ors. [2010] 321 ITR 506 wherein the court held that under Income Tax Act, the assessee can get the benefit of the actual payment is made on or before the return filed as per the principle laid down by court in Vinay Cement case [2007] 213 CTR 268. The Rajasthan High Court in case of CIT Vs. SBBJ [2014] 265 CTR 411 and CIT Vs. Udaipur Dugdh Utpadak Sangh Ltd. [2014] 265 CTR 59 held that where PF/ESI paid after due date under respective act but before filing of return u/s 139 (1) cannot be disallowed u/s 43B or u/s 36 (1) (va) of the Act. Recently Hon'ble Rajasthan High Court again in case of CIT Vs. Rajasthan State Ganga

7 ITA 60/JP/2021 Nirmal Kumar Bardiya vs ACIT, Circle-1, Jaipur Nagar Sugar Mills Ltd. (2017) 393 ITR 421 reiterated the same view and SLP filed by department against said judgement dismissed by Supreme Court (2017) 392 ITR (St) 2.

There are various other High Court decisions on the issue. CIT Vs. Sabri Enterprises (2008) 298 ITR 141 (Kar) etc. and recent judgement of Patna High Court in Bihar State Warehousing Corporation Ltd. Vs CIT (2017) 393 ITR 386. In view of the above Ld. A.O. is wrong and has erred in law in making an addition of Rs. 3,42,412/- to the income of appellant u/s 36 (1) (va) of I.T. Act, 61. In this connection we furthur submit that Ld. A.O. in assessment order relied on the judgement dated 13-03-2010 of Hon'ble jurisdictional High Court in case of Rajasthan Renewable Energy Corporation Ltd. (DBIT Appeal No. 10- 12/2018) for supporting the disallowance. The issue has been elaborately discussed recently by Hon'ble ITAT, Jaipur Bench, Jaipur in case of Dhabariya Agglomeraters P. Ltd. (ITA No. 861/JP/2018) order dated 20-3- 2019. The relevant portion of order is reproduced hereinunder: - “At the outset, we note that once the assessee has paid the employees contribution to ESI and EPF before the due date of filing of return under section 139 (1), then the same cannot be disallowed in view of the binding precedent of Hon'ble jurisdictional High Court including the decision in case of CIT vs. SBBJ, 99 DTR 131 (Raj.). The Ld. CIT (Appeals) has confirmed the disallowance by purportedly following the decision of Hon'ble jurisdictional High Court dated 13th March, 2018 in case of Rajasthan Renewable Energy Corporation Ltd. in DBIT Appeal Nos. 10-12/2018. It is pertinent to note that even the said decision is not against the assessee but there is a typographical mistake in the concluding para of the decision. The Ld. CIT (A) has misunderstood the said decision. For ready reference, we reproduce the decision of the Hon'ble jurisdictional High Court in para 6 as under: - “6. With regard to issue No. 2 and 3 the controversy is pending before the Supreme Court in CIT, Jaipur vs Ms State Bank of Bikner and Jaipur in SLP (c) No. 16249/2014, therefore, subject to decision of SlP, for the present, these issues are decided on in favour of the department and against the assessee. It will be open for the department to recover the amount if the decision is in their favour.”

8 ITA 60/JP/2021 Nirmal Kumar Bardiya vs ACIT, Circle-1, Jaipur Thus it is clear that the Hon'ble Jurisdictional High Court has followed the earlier decision in case of CIT Vs. SBBJ. However, there is an apparent typographical mistake wherein the issue is stated to have been decided in favour of the department and against the assessee but in the last sentence it was again made clear that it will be open for the department to recover the amount if the decision is in their favour, which clearly shows that the issue was in fact decided in favour of the assessee and since the SLP was pending before the Hon'ble Supreme Court and in the event the issue is decided in favour of the revenue, the revenue can recover the taxes. We further note that in case of Pr. CIT Vs. Rajasthan Ex-Servicemen Corporation Ltd. in DBIT Appeal No. 7/2018, the Hon'ble jurisdictional High Court has again considered this issue in para 3 & 4 as under:- “3. The facts of the case are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s 143 (3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) was framed vide order dated 22/11/2016. While framing the assessment the Assessing Officer noticed that the assessee has deposited employees contribution towards PF and ESI after due date of payment. Therefore, he made disallowance of Rs. 6,60,27,182/-. Aggrieved by this, the assessee preferred an appael before Ld. CIT (A), who after considering the submissions and relying upon the judgement of the Rajasthan High Court in the case of CIT Vs. State Bank of Bikaner & Jaipur (2014) 99 DTR 131 (Raj.) deleted the disallowance. 4. Regarding both the issues relating to PF & ESI, the controversy is pending before the Supreme Court in SLP No. 16249/2014 (The State of Rajasthan CIT, Jaipur vs. M/s State Bank of Bikaner and Jaipur), hence the issues are decided subject to SLP.” Therefore, in view of the earler decision which was followed by the Hon'ble High Court in these two decisions, the issue is covered by the binding precedent of Hon'ble jurisdictional High Court, hence the disallowance made by the AO and confirmed by the Ld. CIT (A) is deleted. Thus in view of above binding decision of jurisdiction ITAT the judgement of Rajasthan Renewable Energy Corporation Ltd. having a typographical error cannot be applied and in view of binding precedent of CIT Vs. SBBJ (Supra) the deduction of Rs. 3,42,412/- is allowable as the assessee deposited PF contribution made by employees a few days late but before filing of return u/s 139 (1) and

9 ITA 60/JP/2021 Nirmal Kumar Bardiya vs ACIT, Circle-1, Jaipur hence the same is allowable in law. It is prayed that the disallowance of Rs. 3,42,412/- may kindly be deleted. It is further submitted that decision(s) of jurisdictional High Court, having jurisdiction over the assessing officer should be followed and applied by NFAC merely because some conflicting decision of non-jurisdictional High Court, the relief should not be refused to assessee. Reliance is placed in recent ITAT, Agra Bench, Agra judgement in case of Mahadev Cold Storage Vs. Jurisdictional Assessing Officer, Agra (ITA No. 41 & 42/Agra/2021 dated 14-6-2021(Para – 18 26) Further it is submitted that for bringing clarity on the issue the Finance Bill, 2021 proposed to add an Explanation – 2 to section 36 (1) (va) and Explanation – 5 to section 43B specifically to disallow the employees contribution to by clarifying that provisions of section 43B shall not apply. It was also clarified in Memo explaining the provisions in the Finance Bill, 2021 under the head rationalization of various provision that the said explanations to section 36 (1) (va) and 43B proposed to be introduced by Finance Bill, 2021 (clause 8 & 9 of Bill) will take effect from 1st April, 2021 and wiil accordingly apply to assessment years 2021-22 and subsequent years. Thus no disallowance is to be made for not depositing employees contribution to PF/ESI on due date(s) and deposited late but before due date of filing return u/s 139 (1) prior to A.Y. 2021-22. The above legal view is supported with the recent ITAT, Hyderabad ‘SMC’ Bench judgement in case of Salzgitter Hydraulics P. Ltd. Vs. I.T.O. (2021) 189 ITD 676 / 128 taxman.com 192 (Hyderabad) wherein said amendment made by Finance Act, 2021 held as prospective to be applied from A.Y. 2021-22. The ITAT, Allahabad Bench recently in case of JCIT (OSD) – Circle – 2 Vs. Bharat Pumps & Compressors Ltd. (ITA No. 147 & 148 / Alld/2016 order dated 12-08-2021) after discussing several judgement on the issue and following judgements of Allahabad High Court in Sagun Foundary Private Ltd. Vs. CIT Kanpur in ITA No. 87 of 2016 order dated 21-12-2016 held that contribution of employees towards PF/ESI deposited beyond due date under respective Act but before due date prescribed for filing return of income u/s 139 (1) is allowable. The Hon'ble Court on explanation inserted to rationalize the provisions of section 36 (1) (va) and 43B by Finance Act, 2021 held that “it is specifically stated in Memorandum to Finance Bill, 2021 that these amendments to Section 36 (1) (va) and 43B shall take effect from 01st April, 2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years. It is also to be noted that several of the tax-payers (except in the State of Gujarat and Kerala, and such other States where Hon'ble jurisdictional High Court has decided this issue in favour of Revenue) situated in the States where Hon'ble jurisdictional High Court

10 ITA 60/JP/2021 Nirmal Kumar Bardiya vs ACIT, Circle-1, Jaipur has decided this issue in favour of tax-payers, have already been allowed the deduction towards employee contribution received by employer which was deposited late by employer beyond the time stipulated u/s 36 (1) (va), but before the due date as prescribed for filing of return of income u/s 139 (1) of the 1961 Act, and there cannot be a class different now at this stage where the deduction is to be denied on the ground of strict interpretation of the provisions of Section 36 (1) (va), unless the amendment made by Finance Act, 2021 is made specifically applicable retrospectively from the date of insertion of the provision or any other specified earlier date in the Finance Act, rather on the other hand, the Memorandum to Finance Bill, 2021 has specifically made this amendment applicable from 01.04.2021 and specified that the same shall be made applicable from assessment year 2021-22 and subsequent assessment years. The court also noticed the above stated judgement of ITAT, Hyderabad, SMC Bench. It is thus submitted that said amendments made by Finance Act, 2021 are applicable from A.Y. 2021-22 only and prior to that deduction for employees contribution to PF/ESI paid after due date under respective Act but before due date prescribed for filing return u/s 139 (1) is allowable in law. The Hon’ble Jurisdictional ITAT, Jaipur bench, Jaipur in the case of Dhabriya Polywood Pvt. Ltd. Vs ADIT, CPC, Bengluru [2021] 133 taxmann.com 135 (Jaipur - Trib.) held that where amount claimed on payment of PF and ESI had been deposited with a delay of few days from due dates mentioned under respective statute, but on or before due date of filing of return under section 139(1), same could not be disallowed under section 43B or under section 36(1)(va). The Hon’ble bench further held that these amendments will take effect from 1st April, 2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years". The impugned assessment year is assessment year 2019-20 and therefore, the said amendment cannot be applied in the instant case.

It is thus prayed that disallowance of Rs. 3,42,412/- made by Ld. AO and confirmed by Ld. CIT(A) may kindly be deleted.’’

4.6 On the other hand, the ld. DR supported the orders of the lower authorities. 4.7 We have heard both the parties and perused the materials available on record. The Bench noted during the course of hearing that the AO made an

11 ITA 60/JP/2021 Nirmal Kumar Bardiya vs ACIT, Circle-1, Jaipur addition of Rs.3,42,412/- on account of late deposit of employees PF by the assessee. However, the assessee deposited the employees PF contribution before due date of filing of return of income u/s 139 of the Act. It is further observed that the ld. CIT(A) has confirmed the action of the AO holding that the sum of Rs.3,42,412/- being employees contribution to PF has been paid late under that Act and thus the addition made by the AO deserves to be upheld. The Bench has taken into consideration its various orders wherein similar issue has been decided in favour of the assessee on the issue in question. Recently, the similar issue of late deposit of employees PF/ESI contribution by the assessee but paid the same before due date of filing of return of income in the case of Sanjay Porwal vs CPC, Bengaluru/ITO, Ward 6(4), Jaipur (ITA NO.63/JP/2022) vide order dated 06-04-2022 has been disposed off by observing as under:-

‘’ 4.7. We have considered the rival submissions as well as the relevant material on record. There is no dispute that prior to the amendment brought by the Finance Bill, 2021 in Section 36(1)(va) as well as Section 43B of the Act, the issue of allowability of employees contribution towards PF and ESI and depositing the same in the government account before the due date of filing of return of income U/s 139(1) of the Act was settled and decided in favour of the assessee by various binding precedents of Hon’ble High Courts including the Jurisdictional High Court. The limited controversy is whether the amendment brought to Section 36(1)(va) as well as 43B of the Act is applicable retrospective or from assessment year 2021-22 as it is specifically stated in the memorandum of Finance Bill, 2021.

12 ITA 60/JP/2021 Nirmal Kumar Bardiya vs ACIT, Circle-1, Jaipur At the outset, it is noted that the Coordinate Bench of this Tribunal in the case of M/s Kogta Financial (India) Ltd. Vs CPC (supra) has considered this issue in para 5 to 7 as under:

“5. We have heard the rival contentions and perused the material available on record. In case of Mohangarh Engineers and Construction Company vs DCIT, CPC (Supra), speaking through one of us, we have extensively dealt with the identical matter relating to employee’s contribution towards ESI/PF and our findings therein read as under:- “13. We have heard the rival contentions and perused the material available on record. On perusal of the details submitted by the assessee as part of its return of income, it is noted that the assessee has deposited the employees’s contribution towards ESI and PF well before the due date of filing of return of income u/s 139(1) and the last of such deposits were made on 16.04.2019 whereas due date of filing the return for the impugned assessment year 2019-20 was 31.10.2019 and the return of income was also filed on the said date. Admittedly and undisputedly, the employees’s contribution to ESI and PF which have been collected by the assessee from its employees have thus been deposited well before the due date of filing of return of income u/s 139(1) of the Act. 14. The issue is no more res integra in light of series of decisions rendered by the Hon’ble Rajasthan High Court starting from CIT vs. State Bank of Bikaner & Jaipur (supra) and subsequent decisions. 15. In this regard, we may refer to the initial decision of Hon’ble Rajasthan High Court in case of CIT vs. State Bank of Bikaner & Jaipur wherein the Hon’ble High Court after extensively examining the matter and considering the various decisions of the Hon’ble Supreme Court and various other High Courts has decided the matter in favour of the assessee. In the said decision, the Hon’ble High Court was pleased to held as under: “20. On perusal of Sec.36(1)(va) and Sec.43(B)(b) and analyzing the judgments rendered, in our view as well, it is clear that the legislature brought in the statute Section 43(B)(b) to curb the activities of such tax payers who did not discharge their statutory liability of payment of dues, as aforesaid; and rightly so as on the one hand claim was being made under Section 36 for allowing the deduction of GPF, CPF, ESI etc. as per the system followed by the assessees in claiming the deduction i.e. accrual basis and the same was being allowed, as the liability did exist but the said amount though claimed as a deduction was not being deposited even after lapse of several years. Therefore, to put a check on the said

13 ITA 60/JP/2021 Nirmal Kumar Bardiya vs ACIT, Circle-1, Jaipur claims/deductions having been made, the said provision was brought in to curb the said activities and which was approved by the Hon'ble Apex Court in the case of Allied Motors (P) Ltd. (supra). 21. A conjoint reading of the proviso to Section 43-B which was inserted by the Finance Act, 1987 made effective from 01/04/1988, the words numbered as clause (a), (c), (d), (e) and (f), are omitted from the above proviso and, furthermore second proviso was removed by Finance Act, 2003 therefore, the deduction towards the employer's contribution, if paid, prior to due date of filing of return can be claimed by the assessee. In our view, the explanation appended to Section 36(1)(va) of the Act further envisage that the amount actually paid by the assessee on or before the due date admissible at the time of submitting return of the income under Section 139 of the Act in respect of the previous year can be claimed by the assessee for deduction out of their gross total income. It is also clear that Sec.43B starts with a notwithstanding clause & would thus override Sec.36(1) (va) and if read in isolation Sec. 43B would become obsolete. Accordingly, contention of counsel for the revenue is not tenable for the reason aforesaid that deductions out of the gross income for payment of tax at the time of submission of return under Section 139 is permissible only if the statutory liability of payment of PF or other contribution referred to in Clause (b) are paid within the due date under the respective enactments by the assessees and not under the due date of filing of return. 22. We have already observed that till this provision was brought in as the due amounts on one pretext or the other were not being deposited by the assessees though substantial benefits had been obtained by them in the shape of the amount having been claimed as a deduction but the said amounts were not deposited. It is pertinent to note that the respective Act such as PF etc. also provides that the amounts can be paid later on subject to payment of interest and other consequences and to get benefit under the Income Tax Act, an assessee ought to have actually deposited the entire amount as also to adduce evidence regarding such deposit on or before the return of income under sub-section (1) of Section 139 of the IT Act. 23. Thus, we are of the view that where the PF and/or EPF, CPF, GPF etc., if paid after the due date under respective Act but before filing of the return of income under Section 139(1), cannot be disallowed under Section 43B or under Section 36(1)(va) of the IT Act.” 16. The said decision has subsequently been followed in CIT vs. Jaipur Vidyut Vitran Nigam Ltd. (supra), CIT vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. (supra), and CIT vs Rajasthan State Beverages Corporation Limited (supra). In all these decisions, it has been consistently held that where the PF and ESI dues are paid after the due

14 ITA 60/JP/2021 Nirmal Kumar Bardiya vs ACIT, Circle-1, Jaipur date under the respective statues but before filing of the return of income under section 139(1), the same cannot be disallowed under section 43B read with section 36(1)(va) of the Act. 17. We further note that though the ld. CIT(A) has not disputed the various decisions of Hon’ble Rajasthan High Court but has decided to follow the decisions rendered by the Hon’ble Delhi, Madras, Gujarat and Kerala High Courts. Given the divergent views taken by the various High Courts and in the instant case, the fact that the jurisdiction over the Assessing officer lies with the Hon’ble Rajasthan High Court, in our considered view, the ld CIT(A) ought to have considered and followed the decision of the jurisdictional Rajasthan High Court, as evident from series of decisions referred supra, as the same is binding on all the appellate authorities as well as the Assessing officer under its jurisdiction in the State of Rajasthan. 18. In light of aforesaid discussion and in the entirety of facts and circumstances of the case, the addition by way of adjustment while processing the return of income u/s 143(1) amounting to Rs 4,38,530/- so made by the CPC towards the delayed deposit of the employees’s contribution towards ESI and PF though paid well before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted as the same cannot be disallowed under section 43B read with section 36(1)(va) of the Act in view of the binding decisions of the Hon’ble Rajasthan High Court.” 6. In the instant case, admittedly and undisputedly, the employees’ contribution to ESI and PF collected by the assessee from its employees have been deposited well before the due date of filing of return of income u/s 139(1) of the Act. Further, the ld D/R has referred to the explanation to section 36(1)(va) and section 43B by the Finance Act, 2021 and has also referred to the rationale of the amendment as explained by the Memorandum in the Finance Bill, 2021, however, I find that there are express wordings in the said memorandum which says “these amendments will take effect from 1st April, 2021 and will accordingly apply to assessment year 2021-22 and subsequent assessment years”. In the instant case, the impugned assessment year is assessment year 2018-19 and therefore, the said amended provisions cannot be applied in the instant case. Similar view has been taken by the Coordinate Bangalore Benches in case of Shri Gopalkrishna Aswini Kumar vs. ACIT (supra) wherein it has held as under:- “7. The Hon'ble Karnataka High Court in the case of Essae Teraoka Pvt. Ltd., (supra) has taken the view that employee's contribution under section 36(1)(va) of the Act would also be covered under section 43B of the Act and therefore if the share of the employee's share of contribution is made on or before due date for furnishing the return of income under section 139(1) of the Act, then the assessee would be entitled to claim

15 ITA 60/JP/2021 Nirmal Kumar Bardiya vs ACIT, Circle-1, Jaipur deduction. Therefore, the issue is covered by the decision of the Hon'ble Karnataka High Court. The next aspect to be considered is whether the amendment to the provisions to section 43B and 36(1)(va) of the Act by the Finance Act, 2021, has to be construed as retrospective and applicable for the period prior to 01.04.2021 also. On this aspect, we find that the explanatory memorandum to the Finance Act, 2021 proposing amendment in section 36(1)(va) as well as section 43B is applicable only from 01.04.2021. These provisions impose a liability on an assessee and therefore cannot be construed as applicable with retrospective effect unless the legislature specifically says so. In the decisions referred to by us in the earlier paragraph of this order on identical issue the tribunal has taken a view that the aforesaid amendment is applicable only prospectively i.e., from 1.4.2021. We are therefore of the view that the impugned additions made under section 36(1)(va) of the Act in both the Assessment Years deserves to be deleted.” 7. In light of the aforesaid discussions and in the entirety of facts and circumstances of the case and following the consistent decisions taken by the various Benches of the Tribunal, the addition by way of adjustment while processing the return of income u/s 143(1) amounting to Rs. 37,62,586/- so made by the CPC towards the deposit of the employees’s contribution towards ESI and PF though paid before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted.”

Thus, it is clear from the above cited decision that this Tribunal has considered various decisions on this issue and by following decisions of the Coordinate Benches of the Tribunal, this issue was decided in favour of the assessee by holding that amendment in Section 36(1)(va) as well as Section 43B of the Act by way of inserting the explanation vide Finance Bill, 2021 are applicable only from A.Y. 2021-22 and subsequent assessment years and therefore, the said amendment is not applicable to the assessment year under consideration. 4.8. Similar view has been taken by the Delhi Benches of the Tribunal in the case of Chatru Mal Garg Vs ACIT (supra) in para 7 as under: “7. I have heard the rival submissions and perused the materials on record. The issue in the present ground is with respect to disallowance under section 36(1)(va) of the Act. It is an undisputed fact that there has been slight delay in the deposit of employees’ contribution of PF and ESI by the assessee and the contribution have been deposited beyond the due date prescribed by the relevant authorities but at the same time it is also a fact that the amounts have been deposited with the appropriate authorities by the assessee before filing the return of income for the relevant assessment year. I find that Hon’ble Delhi High Court

16 ITA 60/JP/2021 Nirmal Kumar Bardiya vs ACIT, Circle-1, Jaipur in the case of CIT vs. AIMIL Ltd. (supra) has held that no disallowance under section 36(1)(va) of the Act is called for when the amounts are deposited before filing the return of income. Similar view has also been taken by the Hon’ble Punjab & Haryana High Court in the case of CIT vs. Hemla Embroidery Mills (P) Ltd (supra) and Indian Geotechnical Services (supra). As far as the applicability of amendment made by Finance Act 2021 is concerned, I find that the Co-ordinate Bench of Tribunal in the case of Indian Geotechnical Services (supra) has held that amendment made by Finance Bill 2021 shall take effect from 1st April 2021 and will accordingly apply to A.Y. 2021-11 and subsequent years. In the present case assessment year involved is 2018-19 and therefore following the aforesaid decision in thecase of Indian Geotechnical Services (supra), I am of the view that the amended provisions would have no application to the case under consideration. Before me, Learned DR has relied on the decision of Co-ordinate Bench of Tribunal in the case of Vedvan Consultants Pvt. Ltd. (supra). It is settled law that when two judgments are available giving different views then the judgment which is in favour of the assessee shall apply as held in case of Vegetable Products Ltd. 82 ITR 192 by the Hon’ble Supreme Court. I therefore following the decision of High Courts cited hereinabove and the decision of the Co-ordinate Bench of Tribunal, I am of the view that no addition u/s 36(1)(va) of the Act is called for in the present case. Therefore I direct the AO to delete the addition. Thus the ground of assessee is allowed.’’ Thus, it is clear that the Delhi Benches of the Tribunal has considered the earlier decision of the Tribunal in the case of Vadvan Consultants Pvt. Ltd. (supra) which was relied upon by the ld. CIT(A) as well as the ld. DR and the issue was decided by following the decisions of Hon’ble Delhi High Court and Hon’ble Punjab & Haryana High Court and the decisions of the Division Bench of the Delhi Tribunal in the case of Indian Geotechnical Services in ITA No. 622/Del/2018 order dated 27/08/2021. Accordingly, in view of the above discussions as well as following the decisions of the Coordinate Benches of the Tribunal, this issue is decided in favour of the assessee and consequently, the disallowance made on account of employees contribution towards PF & ESIC deposited before due date of filing of return of income U/s 139(1) of the Act amounting to Rs. 2,90,435/- is deleted. 5.0. In the result, the appeal of the assessee is allowed.’’ 4.8 Respectfully following the order of this Bench in the case of Sanjay Porwal vs CPC Bengaluru/ITO, Ward 6(4), Jaipur (supra), the disallowance made on account of employees contribution towards PF deposited before due

17 ITA 60/JP/2021 Nirmal Kumar Bardiya vs ACIT, Circle-1, Jaipur date of filing of return of income u/s 139(1) of the Act amounting to Rs. Rs.3,42,412/- is deleted. Thus, the appeal of the assessee for the assessment year 2017-18 is allowed. 5.1 As regards the appeal of the assessee for the assessment year 2019-2020 is concerned wherein the ld. CIT(A) sustained the disallowance of Rs.4,31,441/- made by the AO u/s 36(1)(va) r.w.s. 2(24)(x) of the Act on the ground that the PF contribution was deposited by the assessee after due date. The relevant observation of the ld. CIT(A) from para 3.0 to 3.4 dismissing the appeal of the assessee on the issue in question is as under:- ‘’3.0 ………..I have gone through the assessment order, the submission of the appellant and the relevant case laws in this regard. 3.1 Before discussing the above issue, it is noteworthy to produce the language for deduction of contribution to PF, ESIC etc. u/s 36(1)(va) and 43B of the I.T. Act, 1961:- ‘’Section 36(1)(va) provides for deduction of sum received by the taxpayer from his employees as contribution to any provident or superannuation or any other fund, if such sum is deposited by the taxpayer to the relevant fund or before the due date. The ‘due date’ means the date before which the employer is required to deposit the employee’s contribution under the relevant fund under any Act, rule, order, notification issued thereunder etc. 3.2 In certain cases such as Karnataka High Court in the case of Essae Teroka (P) Ltd. vs DCIT (366 ITR 408), Rajasthan HC in case of PCIT vs Rajasthan State Beverages Cor. Ltd (2017) 84 taxmann.com 173, Bombay HC in case of Geekay Security Service vs DCIT (2019) 101 taxmann.com 192, courts had applied provisions of Section 43B and allowed the deduction of employee’s contribution under section 36(1)(va), which is paid by the taxpayer employer after the said due date but before the date of

18 ITA 60/JP/2021 Nirmal Kumar Bardiya vs ACIT, Circle-1, Jaipur filing of return under section 139(1). The employee’s contribution is employees’ own money and the employer deposits the contribution on behalf of the employee, there is a case for enrichment. In turn, the employees are denied interest on their monies. The tax authorities are of the view that section 36(1)(va) was inserted vide the Finance Act, 1987 as a measure for penalizing employers, who mis-utilize employee’s contribution. 3.3 Explanation 2 to section 36(1)(va) has now been inserted to clarify that the provisions of Section 43B shall not apply and shall be deemed to have applied for the purpose of determining the ‘due date’. Further, the newly inserted explanation 5 to Section 43B also clarifies that the provisions of the said section do not apply and deemed to never have been applied to a sum received by the taxpayer from any of his employees to which provisions of section 2(24)(x) apply. This would bring to an end the litigation on the subject. In the recent amendment in the said sections, it is clearly mentioned that the said amendment take effect form 01-04-2021 i.e. A.Y. 2021-22 though it would have retrospective effect in view of the proposed deeming provisions. 3.4 In the light of the latest amendments, the plea of the appellant is not maintainable and is accordingly hereby rejected and the addition so made by the AO is hereby confirmed. Accordingly, these ground of appeal are hereby dismissed.’’ 5.2 We have heard both the parties and perused the materials available on record on the issue in question. Since the similar issue of the assessee for the assessment year 2017-18 has been allowed in favour of the assessee, therefore, the decision taken in the appeal of the assessee for the assessment year 2017- 18 shall apply mutatis mutandis in the appeal of the assessee for the assessment year 2019-20. Thus, the appeal of the assessee is allowed.

19 ITA 60/JP/2021 Nirmal Kumar Bardiya vs ACIT, Circle-1, Jaipur 6.0. In the result, both the appeals of the assessee are allowed. Order pronounced in the open court on 05/05/2022

Sd/- Sd/- ¼ lanhi xkslkbZ ½ 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:- 05 /05/2022 *Mishra आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant-Shri Nirmal Kumar Bardiya, Jaipur 2. izR;FkhZ@ The Respondent- The ACIT, Circle-1, Jaipur /ADIT, CPC Bengaluru 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. 60 & 61/JP/2022) vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेजज. त्महपेजतंत