ODYSSEY MOTORS PRIVATE LIMITED,AINTHAPALI vs. ACIT, SAMBALPUR

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ITA 140/CTK/2021Status: HeardITAT Cuttack17 August 2022AY 2019-205 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the disallowance of PF and ESIC paid after the statutory due date but before the return filing due date is not permissible. The amendment by the Finance Act, 2021, was considered prospective, and the law prior to the amendment allowed such payments.

What were the facts?

The assessee's appeal concerned the disallowance of Provident Fund (PF) and Employees' State Insurance Corporation (ESIC) payments made after the statutory due date but before the due date for filing the income tax return. The Assessing Officer (AO) and CIT(A) had confirmed this disallowance.

What were the issues?

Whether disallowance of employee's contribution to PF/ESIC is permissible if paid after the due date under the respective Act but before the due date of filing the return of income. Whether the amendment to Section 36(1)(va) by the Finance Act, 2021, is retrospective or prospective.

Which sections of the Income-tax Act were involved?

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

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Cases cited in this judgment(4)Show list

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Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL,

Before: ARUN KHODPIA & ARUN KHODPIA & ARUN KHODPIA

For Appellant: Shri S.S.Poddar, AR
For Respondent: Shri S.C.Mohanty, Sr, Shri S.C.Mohanty, Sr DR
Hearing: 17/8Pronounced: 17/8

Odyssey Motors Pvt Ltd., Odyssey Motors Pvt Ltd., Vs. ACIT, Odyssey Odyssey Complex, Complex, NH NH-6, Sambalpur Sambalpur Ainthapalli, Sambalpur Ainthapalli, Sambalpur PAN/GIR No. PAN/GIR No.AAACO 3593 P (Appellant (Appellant) .. ( Respondent Respondent) Assessee by : Shri S.S.Poddar, AR S.S.Poddar, AR Revenue by : Shri S.C.Mohanty, Sr : Shri S.C.Mohanty, Sr DR Date of Hearing : 17/8 8/ 2022 Date of Pronouncement : 17/8 8/2022 O R D E R Per Bench

This is an appeal filed by the assessee against the order of the ld This is an appeal filed by the assessee against the order of the ld This is an appeal filed by the assessee against the order of the ld CIT(A), National Faceless Appeal Centre (NFAC), Delhi dated 5.11.2021 for CIT(A), National Faceless Appeal Centre (NFAC), Delhi dated 5.11.2021 for CIT(A), National Faceless Appeal Centre (NFAC), Delhi dated 5.11.2021 for the assessment year the assessment year 2019-2020.

2.

Shri S.S.Popddar, ld AR appeared on behalf of the asse Shri S.S.Popddar, ld AR appeared on behalf of the asse Shri S.S.Popddar, ld AR appeared on behalf of the assessee and Shri S,.C.Mohanty, ld Sr S,.C.Mohanty, ld Sr DR appeared on behalf of the revenue. DR appeared on behalf of the revenue.

3.

It was submitted by ld AR that the only issue in this appeal was It was submitted by ld AR that the only issue in this appeal was It was submitted by ld AR that the only issue in this appeal was against the action of the ld CIT(A) in confirmin against the action of the ld CIT(A) in confirming the disallowance made by g the disallowance made by P a g e 1 | 5 the AO in respect of PF and ESIC paid beyond the due date under the respective Act but before the due date of filing of return of income. It was the submission that the issue is squarely covered by the decision of Co- ordinate Bench of this Tribunal in the case of Rukmani Infra Projects Ltd vs ACIT in order dated 30.3.2022, wherein, the Co- ordinate Bench of this Tribunal has held as follows:

“7.13 On perusal of the above judgments in favour of the assessee and other quoted by the Ld DR in contrast. Having two opposite opinions on the same issue, it is a moot question that which view should be appreciated. To reach on a judgment on the controversy under this ground in absence of a direct finding of the Apex Court after amendment in the provisions by Finance Bill 2021 or a judgment by the jurisdictional High Court, nonetheless having several judgments of non-jurisdictional High Courts and Benches of ITAT decided both against as well as in favour of the assessee, to decide the issue judiciously, this would be appropriate and it is well settled law originated from case laws mentioned in ensuing paras that if two views are possible in interpreting the provisions of law in taxation, the one favourable to the assessee has to be preferred. 7.14 In Sun Export Corporation, Bombay vs Collector of Customs (1997) 6 SCC 564 it was observed that “even assuming that there are two views possible, it is well settled that one favourable to the assessee in matters of taxation has to be preferred.”. 7.14 In CIT vs. Gwalior Rayon Silk Mfg. Co. Ltd. (1992) 196 ITR 149 (SC) it has held that provisions for deduction, exemption and relief should be interpreted liberally, reasonably and in favour of the assessee. 7.15 In CIT vs. Vegetable Products Ltd., 88 ITR 192 (SC): “if two reasonable constructions of a taxing provisions are possible, that construction which favours the assessee must be adopted”. 7.16 The Hon’ble Supreme Court in the case of CIT Vs. Vatika Township Private Limited, (2014) 367 ITR 466 (SC) has held that the intention of the legislature regarding amendment in the Finance Act, was to make it prospective in nature, which cannot be treated as declaratory/statutory or curative in nature. The relevant observations of the Hon’ble Apex Court in this regard in para 38 are as under :- “38. When we examine the insertion of proviso in Section 113 of the P a g e 2 | 5

Act, keeping in view the aforesaid principles, our irresistible conclusion is that the intention of the legislature was to make it prospective in nature. This proviso cannot be treated as declaratory/statutory or curative in nature. 7.17 Keeping in sight of the above discussion, in the present case which is for the asst. year 2013-14, it is an undisputed fact that the Employees contribution for EPF was duly deposited by the Assessee Company before the due date of filing of return u/s 139(1) of The Income Tax Act. The year under consideration is also before the effective date (01.04.2021, AY 2021-22 onwards) of the amended provision by Finance Bill 2021. Accordingly, in view of various judgments in the favour of assessee, disallowance could not be made in respect of PF/ESI paid within the due date of filing return of income. Therefore, it is directed to delete the disallowance made for delayed remittance of employee’s contribution to EPF for Rs. 59,30,423/-, consequently, the appeal of the assessee is allowed to this extent. 7.18 Thus, ground number 2 of the assessee is partly allowed.”

4.

It was the submission that though the amendment has been made in the provisions of section 36(1)(va) and 43B by the Finance Act, 2021, the said amendment would operate prospectively as has been held by the Hon’ble Delhi High Court in the case of TV Today Network Ltd., order dated 27th July, 2022 in wherein, in para 44, Hon’ble High Court has categorically held that the amendment to section 36(1(va), which is ‘for removal of doubts’ cannot be presumed to be retrospective even where such language is used, if it alters or changes the law as it earlier stood. As the law earlier to amendment was that the disallowance could not be made in respect of PF and ESIC, if the said amount was paid before the due date

P a g e 3 | 5 of filing of return under the Income tax Act though paid after the due date under the respective Act, but same are allowable.

5.

In reply, ld Sr DR supported the order of the AO and ld CIT(A). It was the submission that the amendment to section 36(1)(va) r.w.s 43B should be retrospective. It was the submission that no decision of Hon’ble Jurisdictional High Court is there treating that the amendment is prospective in nature.

6.

We have considered the rival submissions. As it is noticed that the Hon’ble Delhi High Court has categorically held that the amendment to section 36(1)(va) by the Finance Act, 2021 is to operate prospectively and it also noticed that the issue with regard to allowability of PF and ESIC paid beyond the prescribed date but within the due date of filing of return, same is allowable. We are of the view that the view as taken by the Ao and ld CIT(A) is erroneous and same stands reversed.

7.

In the result, appeal of the assessee stands allowed.

Order dictated and pronounced in the open court on 17/8/2022.

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