Honeybee Enterprises Private Limited, Raibag V. Deputy Commissioner of Income Tax (CPC), Bangaluru

ITA 17/PAN/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 0388 (ITAT-PANAJI)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: WT(D)
• Assessment Year: 2019-2020
• Appeal Filed On: 01-09-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJAN KUMAR
• Section: 43B; 143(1); 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘PANAJI’ BENCH, PANAJI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA Nos.15 to 17/PAN/2021 Assessment Year: 2017-18 to 2019-20 HONEYBEE ENTERPRISES PRIVATE LIMITED Near Ambabhavani Temple, Raibag, Karnataka- 591317. PAN: AADCH 0854 K Vs. DCIT, (CPC), Bengaluru. (Appellant) (Respondent) Present for: Appellant by : Shri Pramod Vaidhya, Advocate Respondent by : Shri Ranjan Kumar, CIT, DR & Shri Mayur Kamble, Sr. DR Date of Hearing : 16.06.2022 Date of Pronouncement : 16.06.2022 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: The present set of three appeals filed by the assessee are against the separate orders passed by National Faceless Appeal Centre (NFAC) [in short ld. ‘CIT(A)] dated 12.08.2021 & 23.07.2021 for A.Y. 2017-18, 2018-19 & 2019-20 passed against the intimation u/s 143(1) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) by DCIT, CPC, Bengaluru. 2. The sole issue involved in these appeals of assessee is against the action of ld. CIT(Appeals) in con firmin g the addit ion of Rs.31,54,759/- & Rs.35,93,103/- an d Rs . 42,62,114/- respectively in each of the year s under consideration which was disallowed by the Assessing Officer with the aid of section 36(1)(va) on the gr ound that the ITA Nos.15 to 17/PAN/2021 Honeybee Enterprises Pvt. Ltd. A.Y. 2017-18 To 2019-20 2 assessee failed to make the payment of employees’ contribution to ESI & PF account within the due dat e pr ovided under the PF & ESI Act. He pleaded that the issu e in dispute is squ arely covered by pleth ora of ju dicial precedents placed on recor d in the paper book. The index of the case laws relie d upon is reprodu ced as un der : Sl. No. P articulars 1 Chintoo Creatio ns vs DCIT 1 3 8 taxmann.com 4 9 9 (Del) 2 Kanthi Age ncy Network s vs Asst. Direc tor of Income Tax 1 3 7 taxmann.com 4 1 (Bang) 3 Raj Kumar vs I TD, CP C, Bengaluru 1 3 6 taxmann.com 2 4 4 (Del) 4 Ta nd em Allied Services (P ) Ltd . vs DCIT 1 3 8 taxmann.com 4 1 3 (Bang) 5 P aramjeet Singh vs DCIT 1 3 8 taxmann.com 1 4 7 (Chand igarh) 6 Arihan t A utomob iled vs Income Tax Officer 1 3 7 tammann.com 2 5 8 (Jabalp ur) 7 Moona Dewan vs ACIT 1 3 6 taxmann.com 4 10 (Jaip ur) 8 Ad yar Anand a Bhavan Sweets Ind ia (P) Ltd . vs ACIT 1 3 4 taxmann.com 56 (Chennai) 9 Mohangarh Engi neers and Construc tion Comp any vs DCIT 1 3 3 taxmann.com 1 7 2 (Jod hpur) 10 Saiztgit ter Hyd raulics (P ) Ltd . vs ITO 1 2 8 taxmann.com 1 9 2 (Hyd ) 3. We note that the issue is no longer res integr a. The decisions of Hon’ble High Court Calcutta n amely in the case of (i) CIT –vs.- Vijayshr ee Ltd. in ITAT No. 243 of 2011 & GA No. 26607 of 2011;(ii) CIT –vs.- Philips Car bon Black Ltd. in GA No. 1382 of 2014 & ITAT 31 of 2014; (iii) CIT –vs.- M /s. Coa l India Lt d. in ITA 12 of 2015 an d (iv) M /s. A kzo Nobel India Ltd. –vs.- CIT in ITA No. 110 of 2011 covers the m atter before us. This aspect has been con sidered by the Coor din ate Ben ch of ITAT Kolkat a in the case of Lumin o Indu stries Lt d. –vs.- ITA Nos.15 to 17/PAN/2021 Honeybee Enterprises Pvt. Ltd. A.Y. 2017-18 To 2019-20 3 ACIT (ITA No. 231 & 365/KOL/2021). The ld. D.R., on the other han d, relied u pon the or ders of r evenue authorities. 4. Recently the coor dinate bench of ITAT, Kolkat a h as considered this aspect in ITA Nos. 531 & 532/KOL/2021, wherein the coor dinat e bench took n ote of the earlier or der of ITAT, Kolkata dated 09.03.2022 wh ereby the Tribun al considered the im pact of am endment br ought into section 36(1) as well as 43B by Fin ance Act, 2021. The discussion made in that or der read as un der : “3. On du e con sider ation of th e ab ove f ac ts an d circu ms t an ces, we f in d th at IT AT, Ko l k at a h as du l y ex amin ed th e amen d men t b rou g h t in b y vi rtu e of F in an ce Ac t, 2 0 2 1 . On th e p rop osition an d th e discu ssion made b y th e IT AT in th e c ase of L u min o In du st ries L imi ted & Oth ers read as u n der:- “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 effect from 1 st 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 ofdetermining 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) ITA Nos.15 to 17/PAN/2021 Honeybee Enterprises Pvt. Ltd. A.Y. 2017-18 To 2019-20 4 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 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 ITA Nos.15 to 17/PAN/2021 Honeybee Enterprises Pvt. Ltd. A.Y. 2017-18 To 2019-20 5 the appeal of assessee succeeds and so, it is allowed in favor of assessee”. 4. A p eru s al of th e ab ove wou l d reve al t h at th e ITA T, Kol k at a has specifically propounded that if employees’ contribution received b y an assessee an d p aid to ES I an d P F accou n ts b ef ore th e du e date of f il in g of th e retu rn , th en th e assessee wil l b e el ig ibl e to cl ai m th e dedu c tion of su ch amou n ts. Wi th th e assis t an ce of l d. rep resen tatives, we h ave sp ecif ic al l y gon e th rou g h th e reco rd an d f in d th at p ay men ts h ave b een m ade wi th in th e du e d ates of f il in g of th e retu rn . Wi th th e ab ove ob servation , th ese ap p e al s of th e assessee are t re ate d as allowed. The disallowances stand deleted in both the appeals”. 5. Respectfu lly following the or der of the Coor din at e Benches an d the judicial precedents tabu lated above, we allow this appeal of the assessee an d delete the addition in all the three years. 6. In the result, all the three appeals of assessee are allowed. Order pronounced in the open court on 16.06.2022. Sd/- Sd/- (CHANDRA MOHAN GARG) (GIRISH AGRAWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Panaji, Dated: 16.06.2022. Biswajit, Sr. P.S. Copy to: 1. The Appellant: Honeybee Enterprises Private Limited 2. The Respondent: DCIT (CPC) Circle-2, Bangaluru. 3. The CIT, Concerned, 4. The CIT (A) Concerned, 5. The DR Concerned Bench //True Copy// [ By Order Sr. Private Secretary ITAT, Panaji (on tour)