NIKUNJ BHAI RUKHIYANA,GURGAON vs. ITO, SAMBALPUR, & DCIT CPC, BANGALORE, SAMBALPUR

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ITA 96/CTK/2022Status: HeardITAT Cuttack07 October 2022AY 2018-194 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the amendment to Section 36(1)(va) by the Finance Act, 2021, operates prospectively. Therefore, payments made within the return filing due date are allowable.

What were the facts?

The assessee's appeal concerns the disallowance of PF & ESI payments made after the due date under the respective Acts but before the return filing due date. The disallowance was based on an amendment to Section 36(1)(va) by the Finance Act, 2021.

What were the issues?

Whether the amendment to Section 36(1)(va) by the Finance Act, 2021, is retrospective or prospective, and its impact on the allowability of delayed PF & ESI payments.

Which sections of the Income-tax Act were involved?

Section 36(1)(va),Section 43B

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Income Tax Appellate Tribunal, CUTTACK BENCH CUTTACK

Hearing: 10/10/2022Pronounced: 10/10/2022

Per Bench : This is an appeal filed by the assessee against the order of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 25.03.2022, for the assessment year 2018-2019. 2. The only issue in this appeal is the confirmation of disallowance u/s.43B of the Act in respect of the delay in payment of PF & ESI under the respective Acts but paid before the due date of filing of the return. It was the submission that the disallowance has been made holding that there has been an amendment to Section 36(1)(va) by the Finance Act,

2 2021. It was the submission that on appeal the ld.CIT(A) has also confirmed the disallowance. It was also the submission that the amendment to Section 36(1)(va) of the Act was prospective in nature as has been held by the Delhi Bench of the Tribunal in ITA No.5204/Del/2017 in the case of T.V.Today Network Ltd. order dated 27.07.2022. It was the submission that the disallowance is not permissible in an intimation u/s.143(1) of the Act insofar as the amendment is prospective in nature.

3.

In reply, ld. Sr. DR vehemently supported the orders of the AO and CIT(A). The ld. Sr. DR submitted that the amendment made by the Finance Act, 2021 had to be read retrospectively, insofar as the Hon’ble Supreme Court in the case of Podar Cement (P) Ltd., [1997] 226 ITR 625 (SC) has held that such amendment done in respect of the provisions of Section 22 to 27 of the Act was declaratory and had retrospective operation. He also placed reliance on the decision of the Hon’ble Supreme Court in the case of Gold Coin Health Food (P) Ltd. (2008) 304 ITR 308 (SC) to submit that the introduction Explanation 2 to Section 36 (va) of the I.T.Act, 1961 and Explanation (v) to Section 43B of the Act were to read retrospective. It was also submitted by the ld. Sr. DR that the memorandum itself says that the provision of amendment is operative from 01.04.2021 and that itself showed that the amendment is retrospective in nature. It was the submission that in view of the Explanation, the employees’ contribution to PF & ESI paid beyond the due date under the respective Act is liable to be upheld.

3

4.

We have considered rival submissions. In respect of retrospective/prospective operation of the amendment by the Finance Act, 2021, the issue is now settled by the decision of the Hon’ble Delhi High Court in the case of TV Today Network Ltd., in ITA No.227 of 2022, vide judgment dated 29.07.2021, wherein the Hon’ble High Court has categorically held that the amendment to section 36(1)(va) by the Finance Act, 2021 is to operate prospectively. In the present case it is noticed that the issue is with regard to allowability of PF and ESIC paid beyond the prescribed date but within the due date of filing of return, therefore, the same is allowable. This issue has also been decided by this Bench of the Tribunal in ITA No.140/CTK/2021, Odyssey Motors Pvt. Ltd., order dated 17.08.2022 in favour of the assessee. This being so, respectful following the principles laid down by the Hon’ble Delhi High Court in the case of TV Today Network Ltd., the addition as made by the AO and confirmed by the CIT(A) in this appeal stands deleted.

5.

In the result, appeal of the assessee stands allowed. Order dictated and pronounced in the open court on 10/10/2022. (अरुण खोड़पऩया) (जाजज माथन) (ARUN KHODPIA) (GEORGE MATHAN) ऱेखा सदस्य/ ACCOUNTANT MEMBER न्यानयक सदस्य / JUDICIAL MEMBER कटक Cuttack; ददनाांक Dated 10/10/2022 Prakash Kumar Mishra, Sr.P.S.

4 आदेश की प्रनिलऱपप अग्रेपषि/Copy of the Order forwarded to : 1. अऩीऱाथी / The Appellant- Nikunj Bhai Rukhiyana, C/o. M.D. & Company Gola Bidi works, Sadar Bazar dhamtari, Dhamtari-493773, Chhattisgarh प्रत्यथी / The Respondent-

2.

ITO Sambalpur/ ADIT, CPC. Bengaluru आयकर आयुक्त(अऩीऱ) / The CIT(A), 3. 4. आयकर आयुक्त / CIT पिभागीय प्रयतयनधध, आयकर अऩीऱीय अधधकरण, कटक / DR,

5.

ITAT, Cuttack गार्ज पाईऱ / Guard file. 6. आदेशािुसार/ BY ORDER, सत्यापऩत प्रयत //// (

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