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

ITA 6/ASR/2022

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 8723 (ITAT-AMRITSAR)
• Duration Of Justice: 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2019-2020
• Appeal Filed On: 09-01-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: TRILOCHAN SINGH P.S. KHALSA
• Assessee Lawyers: HEMANT SEHGAL
• Section: 2; 43B; 143(1); 139(1); 43

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. 6/Asr/2022 Assessment Year: 2019-20 ACIT, Central Circle, Amritsar Vs. Dr. Amandeep Kaur 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. 2. The department has raised the following grounds of appeal: “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 ACIT v. Dr. Amandeep Kaur 2 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. 2. That the Ld. CIT(A) erred in ignoring the Circular No.22/2015 issued by the CBDT.” 3. The only grievance of the revenue is related to deleting the 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. 4. The Ld. Addl. CIT(DR) submitted that the Ld.CIT(A) erred on law in 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 ACIT v. Dr. Amandeep Kaur 3 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 ACIT v. Dr. Amandeep Kaur 4 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. 5. The ld. AR submitted that the assessee deposited employee’s 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 ACIT v. Dr. Amandeep Kaur 5 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 1 st 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. 6. We have heard both the parties, and perused the material on record. 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 ACIT v. Dr. Amandeep Kaur 6 express wordings in the said memorandum which says “these amendments will take effect from 1 st 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 ACIT v. Dr. Amandeep Kaur 7 that the impugned additions made under section 36(1)(va) of the Act in both the Assessment Years deserves to be deleted.” 7. In the backdrop of the aforesaid discussions and following the 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. 8. In the result, the appeal of the revenue is dismissed. 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 True Copy By Order