ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE, AMRITSAR vs. DOCTOR AMANDEEP KAUR ,AMANDEEP HOSPITAL, AMRITSAR

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE DR. M. L. MEENA, ACCOUNTANT MEMBER AND SH. ANIKESH BANERJEE, JUDICIAL MEMBER

I.T.A. No. 6/Asr/2022 Assessment Year: 2019-20

ACIT, Central Circle, Vs. Dr. Amandeep Kaur Amritsar Amandeep Hospital, G.T. Road, Model Town, Amritsar [PAN: AAZPK 1395H] (Appellant) Respondent)

Appellant by : Sh. Trilochan Singh P.S. Khalsa, D.R Respondent by: Sh. Hemant Sehgal, (C.A.)

Date of Hearing: 14.02.2022 Date of Pronouncement: 17.02.2022

ORDER Per Dr. M. L. Meena, AM: The captioned appeal by the revenue is directed against the order of

the CIT(Appeal), National Faceless Appeal Centre, (NFAC), Delhi.

“1. That the Ld.CIT(A) erred in law, in deleting addition/disallowance of Rs.54,34,978/- made by the Assessing Officer in respect of delayed payment of employee’s contribution, beyond the prescribed time, to the labour welfare Funds like EPF/ESI. 1(a) That the Ld.CIT(A) erred on facts and law ignoring the distinction between provision of section 36(l)(v) r.w.s 43B and provisions of section 36(l)(va) r.w.s 2(24)(x) of the Income Tax Act, 1961, which clearly provide for different treatment. While the delayed payment of employers contribution

ITA No. 6/Asr/2022 2 ACIT v. Dr. Amandeep Kaur is allowable if found before the filing of return wherever employee’s contribution is disallowed for once and all if payment is delayed beyond the prescribed time.

1(b) That the Ld. CIT(A) erred in ignoring and failing to take into account the amendment carried out by Finance Act, 2021 by way of inserting Explanation 1 8s Explanation 2 below section 36(l)(va) of the Act which has)' been interpreted by the Hon’ble Appellate Tribunal, Delhi Bench in M/s Vedvan Consultants Pvt. Ltd., New Delhi ITA Nol312/Del/2020 dated 26.08.2021 which was held that the aforesaid explanation was clarificatory.

addition/disallowance of Rs.54,34,978/- made by the Assessing Officer in

respect of delayed payment of employee’s contribution, beyond the

prescribed time, to the labour welfare Funds like EPF/ESI.

ignoring the distinction between provision of section 36(l)(v) r.w.s 43B and

provisions of section 36(l)(va) r.w.s 2(24)(x) of the Income Tax Act, 1961,

which clearly provide for different treatment. It is contended that while the

delayed payment of employers contribution is allowable if found before the

filing of return wherever employee’s contribution is disallowed for once and

all if payment is delayed beyond the prescribed time. He further contended

that the Ld. CIT(A) failed to take into account the amendment carried out by

ITA No. 6/Asr/2022 3 ACIT v. Dr. Amandeep Kaur Finance Act, 2021 by way of inserting Explanation 1 and Explanation 2

below section 36(l)(va) of the Act which has been interpreted by the

Hon’ble Appellate Tribunal, Delhi Bench in M/s Vedvan Consultants Pvt.

Ltd., New Delhi ITA Nol312/Del/2020 dated 26.08.2021 which was held that

the aforesaid explanation was clarificatory and that the Ld. CIT(A) erred in

ignoring the Circular No.22/2015 issued by the CBDT.

4.1 Further, reliance was placed on the amendment brought in by the

Finance Act, 2021 wherein the explanation to Section 36(1)(va) has been

introduced. It was submitted from the said amendment, that the law is and

has always very clear i.e. employee’s contribution to specified fund will not

be allowed as deduction U/s 36(1)(va) if there is delay in deposit even by a

single day as per the due dates mentioned in the respective legislation. It is

also clear that the amendments are only declaratory/clarificatory in nature

and are therefore, applicable with retrospective effect by necessary

intendment of deeming nature expressly stated therein. The ld. DR

accordingly submitted that in view of the unambiguous wording of the

amended provisions of Section 36(1)(va) and 43B, it is clear that the

employee’s contribution can be allowed as a deduction only if it had been

paid within the prescribed due dates under the relevant welfare funds and

this position of law is and has always been the case and the clarification

ITA No. 6/Asr/2022 4 ACIT v. Dr. Amandeep Kaur brought about by the amendment and apply retrospectively although not

mentioned so clearly in the amended provisions. Therefore the ld CIT(A)

was wrong in deleting the the disallowance made U/s 143(1) of the Act by

CPC on account of assessee’s failure to pay the employees’ contribution of

PF/ESI within the prescribed due dates as per Section 36(1)(va) is strictly

in accordance with law and clearly comes under the prima facie

adjustments as envisaged U/s 143(1)(a)(iv) of the Act.

contribution of PF/ESI though with a delay of few days from the due dates

mentioned in the respective Acts, however the same was deposited well

before the due date of filing of return of income. It was submitted that it is

an undisputed fact that such contribution has been deposited before the

due date of filing of the return of income, and therefore no disallowance U/s

36(1)(va) of the Act can be made. In support, reliance was placed on the

Hon’ble Rajasthan High Court decision in case of CIT vs. Rajasthan State

Beverages Corporation Ltd. (2017) 392 ITR 2 and CIT vs. State Bank of

Bikaner and Jaipur (2014) 43 taxmann.com 411. It was further submitted

that the recently Jodhpur Benches of the Tribunal has also taken a similar

view in case of Mohangarh Engineers and Construction company vs DCIT,

CPC (in ITA No. 405/JODH/2021 dated 12.08.2021) and similar view has

ITA No. 6/Asr/2022 5 ACIT v. Dr. Amandeep Kaur been taken by the Bangalore Benches in case of Shri Gopalkrishna Aswini

Kumar vs. ACIT (in ITA No. 359/Bang/2021 dated 12.10.2021). It was

further submitted that the explanation added to Section 36(1)(va) of the Act by the Finance Act, 2021 will take effect from 1st April, 2021 and will apply

from the assessment year 2021-22 and subsequent assessment years and

not to the impugned assessment year. It was further submitted that the

adjustment is beyond the scope of Section 143(1) of the Act. The ld. AR

has also submitted that identical issue has already been decided by the

Coordinate Bench of this Tribunal in assessee’s own case for the A.Y.

2018-19 in ITA No. 186/JP/2021 order dated 15/11/2021 and decided in the

appeal in favour of the assessee. It was accordingly submitted that the

adjustment so made by the CPC is rightly deleted by the ld. CIT(A) NFAC. We have heard both the parties, and perused the material on record. 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, we find that there are

ITA No. 6/Asr/2022 6 ACIT v. Dr. Amandeep Kaur 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 2019-20 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 ((in ITA No. 359/Bang/2021 dated

12.10.2021) wherein it has been 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 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

ITA No. 6/Asr/2022 7 ACIT v. Dr. Amandeep Kaur that the impugned additions made under section 36(1)(va) of the Act in both the Assessment Years deserves to be deleted.”

consistent decisions taken by the Coordinate Benches of the Tribunal, the

order of the Ld. CIT(A), NFAC, deleting the addition by way of adjustment

while processing the return of income u/s 143(1) amounting to Rs.

Rs.54,34,978/- so made by the CPC towards the deposit of the

employees’s contribution towards ESI and PF is hereby sustained.

Order pronounced in the open court on 17.02.2022

Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member

Date: 17.02.2022 *GP/Sr. PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(A), (4) The CIT concerned (5) The Sr. DR, I.T.A.T (6) The Guard File