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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
ORDER Per Dr. M. L. Meena, AM:
The present appeal filed by the assessee is directed against the order passed by the Ld. CIT(A), National Faceless Appeal Centre (NFAC) dated 03.01.2022 u/s 250 of the Income Tax Act, 1961, in respect of AY 2018-19.
The assessee has raised the following grounds of appeal:
“1. That the worthy CIT(Appeals), NFAC have erred both in law and also facts and was wrong and unjustified to have upheld/sustained the additions/disallowances of Rs. 1,34,63,923/-, being employees shares of EPF/ESI, since has failed to consider and appreciate the followings in right perspective;
Ess Ess Kay Engg. Co. Pvt. Ltd. v. The CPC/ACIT Ignoring the facts/evidences that the aforesaid sums stood paid u/s 43B of i) the Income Tax Act much before the filling of the Return of Income u/s 139(1) of the Income Tax Act; And Disregarding the binding decisions of the Hon'ble jurisdictional Punjab & ii) Haryana Court in the case of Hemla Embroidary Works (P) Ltd. 213 ITR 268 and other such decisions following the ratios of the judgements Hon'ble Supreme Court in the case of CIT vs Alom Extrusions Ltd. (2009) 319 ITR 306, Vinay Cement Limited 213 ITR 268 AND CIT vs Mark Auto Industries, 358 ITR 43 (Pb. & Haryana High Court), as relied upon by the assessee.
Disregarding the binding decisions of the Hon'ble ITAT Amritsar Bench in iii) case of Dy. CIT vs. J & K. Co-operative Housing Corp. (P) Ltd vide 495 and 496 (ASR/2020)
2. That the worthy CIT (Appeals) NFAC was also wrong, unjustified and erred in law to have invoked the amended provisions of Finance Act, 2021 vis a vis section 43B and section 36(1)(va) of the Act for the impugned Asstt. Year 2018-19 contrary to very spirit and essence of the said amendments, wherein the legislature have clearly mandated that "these amendments will take effect from 1st April, 2021 and will accordingly apply to the Assessment year 2021-22 and subsequent assessment years".
That on the subject issue of perspective applicability of amendment vide Finance Act, 2021 vis a vis section 43B and section 36(1)(va) of the Act, the assessee places reliance on the decision of the Hon'ble ITAT Hyderabad Bench vide their decision in the case of Value Momentum Software Services (P) Ltd in and Gopalakrishna Aswini Kumar vs Assistant Director of Income Tax, ITAT Banglore 'C Bench - (2021) 208 DTR (Bang) (Trib) 212
That the assessee craves to add, delete amend any grounds of appeal during the appeal proceedings.”
3. The assessee has challenged confirmation of the addition/disallowance of additions/disallowances of Rs. 1,34,63,923/- by the Ld. CIT(A), NFAC being employees shares of EPF/ESI, made by the Ess Ess Kay Engg. Co. Pvt. Ltd. v. The CPC/ACIT A.O. on account of late payments under section 36(1)(va) of the Income Tax Act, 1961 although, before furnishing the return of income under section 139(1) of the Act.
4. The Ld. Counsel submitted that the CIT(A) has ignored the facts and evidences that the aforesaid sums of Rs. 1,34,63,923/-, being employees shares of EPF/ESI, stood paid u/s 43B of the Income Tax Act much before the filling of the Return of Income u/s 139(1) of the Income Tax Act; and the CIT(A) disregarded the binding decisions of the Hon'ble jurisdictional Punjab & Haryana Court in the case of Hemla Embroidary Works (P) Ltd. 213 ITR 268 and the binding decisions of the Hon'ble ITAT Amritsar Bench in case of Dy. CIT vs. J & K. Co-operative Housing Corp. (P) Ltd vide 495 and 496 (ASR/2020). The ld. CIT (Appeals) NFAC was also wrong, unjustified and erred in law to have invoked the amended provisions of Finance Act, 2021 vis a vis section 43B and section 36(1)(va) of the Act for the impugned Asstt. Year 2018-19 contrary to very spirit and essence of the said amendments, wherein the legislature has clearly mandated that "these amendments will take effect from 1st April, 2021 and will accordingly apply to the Assessment year 2021-22 and subsequent assessment years.
On the issue of perspective applicability of amendment vide Finance Act, 2021 vis a vis section 43B and section 36(1)(va) of the Act, the assessee
Ess Ess Kay Engg. Co. Pvt. Ltd. v. The CPC/ACIT placed reliance on the decision of the Hon'ble ITAT Hyderabad Bench vide their decision in the case of Value Momentum Software Services (P) Ltd in Gopalakrishna Aswini Kumar vs Assistant Director of Income Tax, ITAT Banglore 'C Bench - (2021) 208 DTR (Bang) (Trib)
212; Hon'ble Supreme Court in the case of CIT vs Alom Extrusions Ltd. (2009) 319 ITR 306, Vinay Cement Limited 213 ITR 268 AND CIT vs Mark Auto Industries, 358 ITR 43 (Pb. & Haryana High Court).
Per contra, the Ld. Addl. CIT(DR) stands by the order of the Ld. CIT(A).
Having heard both the parties, and perusing the material on record, we note an admitted fact that Rs. 1,34,63,923/-, being employees shares of EPF/ESI, stood paid u/s 43B of the Income Tax Act much before the filling of the Return of Income u/s 139(1) of the Income Tax Act. He contended that since, EPF/ESI contribution has been deposited before the due date of filing of the return of income, the worthy CIT (Appeals) NFAC was wrong and unjustified in law to have invoked the amended provisions of Finance Act, 2021 vis a vis section 43B and section 36(1)(va) of the Act for the impugned Asstt. Year 2018-19 which is contrary to very spirit and essence of the said amendments, wherein the legislature have clearly mandated that "these amendments will take effect from 1st April, 2021 and will
Ess Ess Kay Engg. Co. Pvt. Ltd. v. The CPC/ACIT accordingly apply to the Assessment year 2021-22 and subsequent assessment years.
In the instant case, admittedly 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 relying on the impugned order and has also referred to the rationale of the amendment as explained by the Memorandum in the Finance Bill, 2021, however, we 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 Bench 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 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 Ess Ess Kay Engg. Co. Pvt. Ltd. v. The CPC/ACIT 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.”
In the above view, we accept the grievance of the assessee as justified. Accordingly, the addition of Rs. 1,34,63,923/-, confirmed by the Ld. CIT(A) on account of the employees’ contribution towards ESI and PF hereby directed to be deleted. Thus, the issue is decided in favour of the assessee.
In the result, the assessee’s appeal is allowed.