ITO, Ward-2(4), Durgapur V. Shri Vishnu Khaitan, Durgapur

ITA 160/KOL/2022

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 9778 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2019-2020
• Appeal Filed On: 06-04-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment
• Section: 43B; 143(1); 250; 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘SMC’ BENCH, KOLKATA Before SRI MANISH BORAD, ACCOUNTANT MEMBER & SRI SONJOY SARMA, JUDICIAL MEMBER I.T.A. No.: 160/Kol/2022 Assessment Year: 2019-20 ITO, Ward-2(4), Durgapur.........................................Appellant Vs. Shri Vishnu Khaitan.............................................Respondent [PAN: ALSPK 3740 Q] Appearances by: Sh. Jayanta Khanra, JCIT, appeared on behalf of the Revenue. None appeared on behalf of the Assessee. Date of concluding the hearing : June 6 th , 2022 Date of pronouncing the order : June 7 th , 2022 ORDER Per Manish Borad, Accountant Member: This appeal filed by the Revenue pertaining to the Assessment Year (in short “AY”) 2019-20 is directed against the order passed u/s 250 of the Income Tax Act, 1961 (in short the “Act”) of ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [in short ld. “CIT(A)”] dated 25.08.2021 arising out of the assessment order framed u/s 143(1) of the Act dated 07.07.2020. 2. The Revenue is in appeal before the Tribunal raising the following grounds: I.T.A. No.: 160/Kol/2022 Assessment Year: 2019-20 Shri Vishnu Khaitan. Page 2 of 5 “Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) had erred in allowing the relief to the assessee, on the ground that the assessee had deposited the employees’ contribution of PF and ESIC on or before due date of filing return of the assessee, especially in view of the amendments made in the Income Tax Act, 1961, with effect from 01.04.2021 by inserting the explanation 2 to the Sec. 36(va) and explanation 5 to Sec 43B of the Income Tax Act, 1961. The appellant craved leave to make any amend, addition, alteration, modification etc. of the grounds either before the appellate proceedings, or in the course of appellate proceedings.” 3. None appeared on behalf of the assessee. The sole ground involved in this appeal of the Revenue is against the action of the Ld. CIT(A) deleting the disallowance of Rs. 2,81,527/- made in respect of employees’ contribution towards PF & ESI u/s. 36(1)(va) r.w.s. 2(24)(x) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”). 4. We have heard the ld. D/R and perused the records placed before us. We find that this issue is no longer res-integra as held by this Tribunal in the case of Lumino Industries Ltd. vs. ACIT, Circle-5(1), Kolkata in I.T.A. No.365/Kol/2021 for AY 2015-16 order dated 17.11.2021, wherein the view was taken in favour of the assessee by the Tribunal after holding that the Amendment brought in by Finance Act, 2021 w.e.f. 01.04.2021 is prospective in operation and so will be in force from AY 2021-22 onwards and not retrospective. The relevant portions of the decision read as under: “17. Have heard both the parties. We note that 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). So after the amendment has been inserted according to Shri Miraj D Shah takes I.T.A. No.: 160/Kol/2022 Assessment Year: 2019-20 Shri Vishnu Khaitan. Page 3 of 5 effect from 1st April, 2021 i.e. AY 2021-22 and subsequent assessment year and if the remittance of PF/ESI Employees’ Contribution is not made within the time prescribed by the PF/ESI Act then the remittance cannot be allowed as a deduction which is prospective in operation. Whereas according to Ld. 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. We note that before this amendment has been inserted by Finance Bill, 2021, the Hon’ble Jurisdictional Calcutta High Court in the case of Shri Vijayshree Ltd. Ltd.(supra), M/s Philips Carbon Black Ltd.(supra), M/s Coal India Ltd.(supra), M/s Akzo Nobel India Ltd. (supra) has held that the payment of employees’ contribution if made by an assessee before the due date of filing of return of income u/s 139(1) of the Act, is allowable as a deduction. We note that by Finance Act, 2021, the provision of Section 36(1)(va) as well as Section 43B has been amended to this extend by inserting the Explanation 2 whereby it is clarified that the provision of Section 43B shall not apply and shall be deemed never to have been applied for the purpose of determining the due date under this clause. For ready reference, we reproduce the Explanation-2 to Section 36(1)(va) as under: “Section 36(1)(va) Explanation-2 - For the removal of doubts, it is hereby clarified that the provisions of Section 43B shall not apply and shall be deemed never to have been applied for the purpose of determining the ‘due date* under this clause.” 18. We find that this amendment has been brought in the Act to provide certainty about the applicability of Section 43B in respect of belated payment of employees’ contribution. In order to test whether the amendment brought in later is retrospective or not one has to apply the test as laid by the Hon’ble Supreme Court in the case of M/s Snowtex Investment Ltd. (supra) wherein the Hon’ble Supreme court took note of the law laid down on this issue by the Constitution Bench in M/s Vatika Township Ltd. and held that the intent of the Parliament/legislature need to be looked into for ascertaining whether the amendment should be retrospective or not. In Vatika Township Ltd. (supra) the Hon’ble Supreme Court held that the notes on clauses appended to the Finance Bill will throw light as to the legislative intent; because it has to be borne in mind that Parliament/legislature is aware of three concepts before an amendment is brought in, which can be discerned from reading of the “Notes on Clauses” to the Bill which are (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. So when we adjudicate whether the view of Ld CIT(A) that the I.T.A. No.: 160/Kol/2022 Assessment Year: 2019-20 Shri Vishnu Khaitan. Page 4 of 5 explanation 2 brought in by Finance Act, 2021 is retrospective, let us look at the “Notes on Clauses and the relevant clauses 8 & 9 of the Finance Bill, 2021 (supra) pertaining to the issue in hand which in clear and unambiguous terms spells out the intention of Parliament that the amendment shall take effect from 1 st April, 2021 and therefore will accordingly apply to Assessment Year 2021-22 and subsequent years. So since the legislative intent is clear, the amendment brought in by Finance Act, 2021 on this issue as discussed is prospective and Ld. CIT(A) erred in holding otherwise. So till AY 2021-22, the Jurisdictional High Court’s view in favor of assessee will hold good and is binding on us. As discussed the decision of the Hon’ble Delhi High Court in Bharat Hotels Ltd. (supra) which was in favor of revenue has not considered the decision of the Co-ordinate Division Bench decision in M/s Aimil Ltd.(supra) which is in favour of assessee. So we note that later decision of the Delhi/Hyderabad Tribunal have followed the decision favouring assessee in the light of the Hon’ble Supreme Court decision in M/s Vegetable Products (supra). In the light of the aforesaid decision and relying on the ratio of the Hon’ble Supreme Court in the case of Vatika Township Pvt. Ltd. (supra) and M/s Snowtex Investment Ltd. (supra) and also taking note of the binding decision of the Hon’ble Jurisdictional Calcutta High Court on this issue before us in Shri Vijayshree Ltd. Ltd.(supra), M/s Philips Carbon Black Ltd.(supra), M/s Coal India Ltd.(supra), M/s Akzo Nobel India Ltd. (supra), we set aside the impugned order of Ld CIT(A) and direct the AO to allow the claim of deduction in respect of employees contribution shares towards ESI, PF, by the assessee before the due date of filing of return u/s 139(1) of the Act. Therefore the appeal of assessee succeeds and so, it is allowed in favor of assessee.” 5. In the impugned order of ld. CIT(A), it is noticed that the ld. CIT(A) has acknowledged that the assessee had made the remittance/payment of employees’ contribution towards PF & ESI before the due date of filing of return of income. Therefore, in light of the above judicial precedence (supra), which is squarely applicable on the issue raised before us in the instant appeal, we are inclined to dismiss the appeal of the Revenue holding that the Amendment brought in by Finance Act 2021 w.e.f. 01.04.2021 by inserting an Explanation to section 36(1)(va) and section 43B of the Act is prospective in nature and would apply from AY 2021-22 onwards and, therefore, the Amendment is not applicable to this I.T.A. No.: 160/Kol/2022 Assessment Year: 2019-20 Shri Vishnu Khaitan. Page 5 of 5 assessment year (Assessment Year 2019-20) under consideration. Substantive grounds raised by the Revenue on the issue of deleting disallowance of employees’ contribution towards PF & ESI are dismissed. 6. In the result, the appeal of the Revenue is dismissed. Kolkata, the 7 th June, 2022. Sd/- Sd/- [Sonjoy Sarma] [Manish Borad] Judicial Member Accountant Member Dated: 07.06.2022 Bidhan (P.S.) Copy of the order forwarded to: 1. ITO, Ward-2(4), Durgapur. 2. Shri Vishnu Khaitan, M/s. Sagarbhanga Foundary and Engineering, Naseer Avenue, Durgapur-713 212. 3. CIT(A)- National Faceless Appeal Centre (NFAC), Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. True copy By order Assistant Registrar ITAT, Kolkata Benches Kolkata