SH. SATISH JAIN, JAMMU V. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1, JAMMU

ITA 158/ASR/2022

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 6437 (ITAT-AMRITSAR)
• Duration Of Justice: 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2019-2020
• Appeal Filed On: 19-07-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GHANSHAM SHARMA
• Keywords: Retrospective amendment
• Section: 145; 43B; 143(3); 143(1); 250; 139(1); 113

Judgement Text

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. 175/Asr/2022 Assessment Year: 2020-21 Amritsar Swadeshi Textile Corporation Pvt. Ltd. Ram Tirath Road, Amritsar. [PAN:AAFCA0627F] (Appellant) Vs. Income Tax Officer, Ward-2(1), Amritsar. (Respondent) I.T.A. No. 158/Asr/2022 Assessment Year: 2019-20 Satish Jain, M/s Jain Industries M/s R.R. Medicare, Kathorli, Bari Brahamana Jammu. [PAN:ABLPJ6598A] (Appellant) Vs. DCIT/ACIT, Circle-1, Jammu. (Respondent) I.T.A. No. 168/Asr/2022 Assessment Year: 2020-21 Sant Valves Pvt. Ltd. G.T. Road Bye Pass 144012 Punjab India. [PAN:AABCS8750K] (Appellant) Vs. DCIT/ACIT, Circle-1, Jalandhar. (Respondent) I.T.A. No. 175/Asr/2022 &3 Other Group of cases 2 I.T.A. No. 170/Asr/2022 Assessment Year: 2018-19 TRG Industries Pvt. Ltd. 29 Gauri Mal Complex Rail Head Complex Jammu. [PAN:AAACT6164F] (Appellant) Vs. Dy. Commissioner of Income Tax, National E- Assessment Centre Delhi. (Respondent) Appellant by Sh.R.K. Gupta, CA, Sh. K. Bhagat, CA, And, Sh. Rajat Mehra, CA. Respondent by Sh.Ghansham Sharma, Sr. DR. Date of Hearing 14.09.2022 Date of Pronouncement 16.09.2022 ORDER Per Bench: These four instant appeals of the four different assessees were filed against the order of the Commissioner of Income Tax (Appeals), / National Faceless Appeal Centre, Delhi, [in brevity the CIT(A)] are identicalin fact and having separate orders that were passed u/s 250 of the Income Tax Act, 1961( in brevity the Act) for A.Ys. 2018-19 to 2020-21. The impugned orderswere originated from I.T.A. No. 175/Asr/2022 &3 Other Group of cases 3 the order of the ld. Income Tax Officer, CPC, (in brevity the AO) the order passed u/s 143(1) and 143(3) of the Act. At the outset, all parties stated the relevant factual backdrop as well as the issues involved in all the cases are identical. We therefore, treat the assessee’s appeal bearing ITA No. 158/Asr/2022 for A.Y. 2019- 20 as the lead case. 2. The brief fact of the case is thatthe assessee filed its return u/s 139(1). The return was processed u/s 143(1) the amount of Rs.3,38,724/- was disallowed related to the claim of the employees’ share of ESI/PF. The amount was added back with the total income of the assessee for violation of delayed payment of employee’s contribution to PF and ESI is covered u/s 43B (b) of the Act. But the payment was made before filing of return U/s 139. 3. Aggrieved assessee filed an appeal before the ld. CIT(A). The ld. CIT(A) upheld the order of the ld.AO. 4. During the hearing before the Bench the counsel of the assessee filed a written submission which is kept in the record. 5. We have heard both the parties. The Departmental Representative of the Revenue (in brevity DR) vehemently argued on the issues. The DR relied on the order of CIT(A) and also placed that the employees contribution to PF/ESI can be I.T.A. No. 175/Asr/2022 &3 Other Group of cases 4 allowed only if the same has been deposited within the due date prescribed under the respective Act (PF and ESI Act) and not before the due date of filing of return of income. He also mentioned that the Ld. CIT(A) has taken note of the amendment brought in by Finance Act, 2021, by virtue of it has been clarified that Section 43B does not apply to Section 36(1)(va) of the Act and it is deemed to never have been applied to a sum received by the assessee from any of his employees to which provisions of Section 2(24)(x) applies. And thus according to Ld. CIT(A), it is a clarificatory amendment and so is retrospective in operation and therefore he upheld the action of AO. 6.We relied of orders of jurisdictional High Court & coordinate benches- which are as follows. a. Jurisdictional High Court:- i. CIT vs Mark Auto Industries Ltd ITA no 57 of 2009, 358 ITR 0043 (Punjab & Haryana) ii. CIT vs Nuchem Ltd [2015] 59 taxmann.com 455 (Punjab & Haryana) and [2013] 40 taxmann.com 371 (Punjab & Haryana) b. Coordinate Benches: - I.T.A. No. 175/Asr/2022 &3 Other Group of cases 5 a) ACIT,Cir-3, Srinagar vs M/s Jammu & Kashmir Tourism Development Corporation, TRC, Srinagar, ITA 644&645/Asr/2017 date of order-19/03/2019 b) M/s Vinko Auto Industries Ltd vs. DCIT, CPC, Bangalore ITA:- 63 & 64/Asr/202, date of order:-08/11/2021 The payments have been made within due date of filing of return of income u/s. 139(1) of the Act and as such payment has been made and deposited in the Government account within the stipulated time u/s. 139(1) then no disallowance can be made in view of the decision of the Hon'ble Apex Court in the case of CIT v. Vinay Cement Ltd. [2007] 213 CTR 268, Hon'ble Delhi High Court in the case of CIT v. AIMIL Ltd. [2010] 188 Taxman 265/321 ITR 508 and Commissioner Of Income Tax, Circle-I, Kolkata vs M/S. Vijay Shree Limited, ITAT- 245 of 2011. 7. During the argument of the D/R relied on the orders of the ld AO & the ld. CIT(A). No other contrary judgment was placed during hearing. 8. The reliance was made on the judgment of Hon’able Supreme Court in the case of M/s M.M. Aqua Technologies Ltd. vs. CIT, Delhi and drew our attention to Para 22 wherein the Hon’ble Supreme Court has held that if the retrospectivity of a taxing statute is urged due to the expression used in the Statute is “for the removal I.T.A. No. 175/Asr/2022 &3 Other Group of cases 6 of doubts” cannot be presumed to be retrospective, if it alters or changes the law as it earlier stood and has relied on several decisions of the Hon’ble Supreme Court which reads as under: a. M.M. Aqua Technologies Ltd. v. Commissioner of Income-tax, Delhi-III, [2021] 129 taxmann.com 145 (SC) “22. Second, a retrospective provision in a tax Act which is "for the 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. This was stated in Sedco Forex International Drill. Inc. v. CIT [2005] 149 Taxman 352/279 ITR 310 (SC) as follows: 17. As was affirmed by this Court in Goslino Mario [(2000) 10 SCC 165] a cardinal principle of the tax law is that the law to be applied is that which is in force in the relevant assessment year unless otherwise provided expressly or by necessary implication. (See also Reliance Jute and Industries Ltd. v. CIT [(1980) 1 SCC 139]). An Explanation to a statutory provision may fulfil the purpose of clearing up an ambiguity in the main provision or an Explanation can add to and widen the scope of the main section [See Sonia Bhatia v. State of U.P., (1981) 2 SCC 585, 598] . If it is in its nature clarificatory then the Explanation must be read into the main provision with effect from the time that the main provision came into force [See Shyam Sunder v. Ram Kumar, (2001) 8 SCC 24 (para 44); Brij Mohan Das Laxman Das v. CIT, (1997) 1 SCC 352, 354; CIT v. Podar Cement (P) Ltd., (1997) 5 SCC 482, 506]. But if it changes the law it is not I.T.A. No. 175/Asr/2022 &3 Other Group of cases 7 presumed to be retrospective, irrespective of the fact that the phrases used are "it is declared" or "for the removal of doubts". 18. There was and is no ambiguity in the main provision of section 9(1)(ii). It includes salaries in the total income of an assessee if the assessee has earned it in India. The word "earned" had been judicially defined in S.G. Pgnatale [(1980) 124 ITR 391 (Guj)] by the High Court of Gujarat, in our view, correctly, to mean as income "arising or accruing in India". The amendment to the section by way of an Explanation in 1983 effected a change in the scope of that judicial definition so as to include with effect from 1979, "income payable for service rendered in India". 19. When the Explanation seeks to give an artificial meaning to "earned in India" and brings about a change effectively in the existing law and in addition is stated to come into force with effect from a future date, there is no principle of interpretation which would justify reading the Explanation as operating retrospectively. 23. This being the case, Explanation 3C is clarificatory - it explains section 43B(d) as it originally stood and does not purport to add a new condition retrospectively, as has wrongly been held by the High Court. 24. Third, any ambiguity in the language of Explanation 3C shall be resolved in favour of the assessee as per Cape Brandy Syndicate (supra) as followed by judgments of this Court - See Vodafone International Holdings BV v. Union of India [2012] 17 taxmann.com 202/204 Taxman 408/341 ITR 1 (SC) at paras 60 to 70 per Kapadia, C.J. and para 333, 334 per Radhakrishnan, J.” b. Commissioner of Income-tax (Central)-I, New Delhi v. Vatika Township (P.) Ltd. [2014] 49 taxmann.com 249 (SC) I.T.A. No. 175/Asr/2022 &3 Other Group of cases 8 “Reasons in Support 39. a............... b............... c............... (d)...........Notes on Clauses" appended to Finance Bill, 2002 while proposing insertion of proviso categorically states that "this amendment will take effect from 1st June, 2002". These become epigraphic words, when seen in contradistinction to other amendments specifically stating those to be clarificatory or retrospectively depicting clear intention of the legislature. It can be seen from the same notes that few other amendments in the Income Tax Act were made by the same Finance Act specifically making those amendments retrospectively. For example, clause 40 seeks to amend S.92F. Clause iii (a) of S.92F is amended "so as to clarify that the activities mentioned in the said clause include the carrying out of any work in pursuance of a contract." This amendment takes effect retrospectively from 01.04.2002. Various other amendments also take place retrospectively. The Notes on Clauses show that the legislature is fully aware of 3 concepts: (i) prospective amendment with effect from a fixed date; (ii) retrospective amendment with effect from a fixed anterior date; and (iii) clarificatory amendments which are retrospective in nature. Thus, it was a conscious decision of the legislature, even when the legislature knew the implication thereof and took note of the reasons which led to the insertion of the proviso, that the amendment is to operate prospectively. Learned counsel appearing for the assessees sagaciously contrasted the aforesaid stipulation while effecting amendment in Section 113 of the Act, with various other provisions not only in the same Finance Act but Finance Acts pertaining to other I.T.A. No. 175/Asr/2022 &3 Other Group of cases 9 years where the legislature specifically provided such amendment to be either retrospective or clarificatory. In so far as amendment to Section 113 is concerned, there is no such language used and on the contrary, specific stipulation is added making the provision effective from 1st June, 2002. (e) There is yet another very interesting piece of evidence that clarifies the provision beyond any pale of doubt, viz. understanding of CBDT itself regarding this provision. It is contained in CBDT circular No.8 of 2002 dated 27th August, 2002, with the subject "Finance Act, 2002 - Explanatory Notes on provision relating to Direct Taxes". This circular has been issued after the passing of the Finance Act, 2002, by which amendment to Section 113 was made. In this circular, various amendments to the Income Tax Act are discussed amply demonstrating as to which amendments are clarificatory/retrospective in operation and which amendments are prospective. For example, explanation to Section 158BB is stated to be clarificatory in nature. Likewise, it is mentioned that amendments in Section 145 whereby provisions of that section are made applicable to block assessments is made clarificatory and would take effect retrospectively from 1st day of July, 1995. When it comes to amendment to Section 113 of the Act, this very circular provides that the said amendment along with amendments in Section 158BE, would be prospective i.e. it will take effect from 1st June, 2002. “ 9. The reliance is made on order of coordinate Bench in the case of ITA 644&645/Asr/2017 date of order-19/03/2019 I.T.A. No. 175/Asr/2022 &3 Other Group of cases 10 10. We heard both the parties & consider the documents available in record. The employees’ contribution under PF & ESI Acts are already settled in order of the cases CIT v. Vinay Cement Ltd. [2007] 213 CTR 268, CIT v. AIMIL Ltd. [2010] 188 Taxman 265/321 ITR 508, CIT vs Nuchem Ltd [2015] 59 taxmann.com 455 (Punjab & Haryana) and [2013] 40 taxmann.com 371 (Punjab & Haryana). The catena of judgments is in favour of assessee. The other point, the Finance Bill, 2021 has brought in an amendment which disallows the employees’ contribution made in PF and ESI if not made within the due date as prescribed by the respective statutes (PF and ESI Act). As per assessee the amendment has been inserted which takes effect from 1st April, 2021 i.e AY 2021-22 which is subsequent in nature. Whereas according to the CIT(A), the amendment brought in is clarificatory in nature so, retrospective in operation. So, we have to adjudicate this issue whether the amendment brought in by Finance Act, 2021 is prospective or retrospective in operation. The following the decisions of the High Court which are based on the principle laid down in the case of Vinay Cement Ltd. (supra), M.M. Technologies Ltd (supra), Vatika Township (P.) Ltd (supra) & the co-ordinate Benches (supra) have passed catena of judgments holding the same proposition that prior to the amendment brought in the statute I.T.A. No. 175/Asr/2022 &3 Other Group of cases 11 w.e.f. 1-4-2021, no disallowance can be made that the payment to the employee's contribution to PF and ESI paid by the assessee before the due date of filing of return of income u/s. 139(1). Accordingly, we hold that no disallowance can be made in the assessment year prior to Assessment Year 2021-22. We find that facts for the other appeals under consideration are mutatis mutandis similar to the facts involved in ITA No. 158/Asr/2022 . 11. In the result, ITA Nos. 158/Asr/2022, 168/Asr/2022, 170/Asr/2022 and 175/Asr/2022 of the assessees are allowed. Order pronounced in the open court on 16.09.2022 Sd/- Sd/- (Dr. M. L. Meena) (ANIKESH BANERJEE) Accountant Member Judicial Member AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By Order