VINKO AUTO INDUSTREIES LIMITED, JALANDHAR V. DEPUTY COMMISSIONER OF INCOME TAX CPC, BAGLORE

ITA 64/ASR/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 9185 (ITAT-AMRITSAR)
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2019-2020
• Appeal Filed On: 23-08-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 43B

Judgement Text

आयकर आयकरआयकर आयकर अपीलीय अपीलीयअपीलीय अपीलीय अिधकरण अिधकरणअिधकरण अिधकरण, अमृतसर अमृतसरअमृतसर अमृतसर यायपीठ यायपीठ यायपीठ यायपीठ, , , , अमृतसर अमृतसरअमृतसर अमृतसर IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (THROUGH VIDEO CONFERENCING AT CHANDIGARH) ी एन ी एन ी एन ी एन. .. .के केके के . .. .सैनी सैनीसैनी सैनी, , , , उपा य एवं ी एन उपा य एवं ी एनउपा य एवं ी एन उपा य एवं ी एन. .. .के केके के . .. .चौधर" चौधर" चौधर" चौधर" याियक सद$य के सम याियक सद$य के सम याियक सद$य के सम याियक सद$य के सम । BEFORE SHRI N. K. SAINI, VICE PRESIDENT & SHRI N. K. CHOUDHRY, JUDICIAL MEMBER आयकर आयकरआयकर आयकर अपील अपीलअपील अपील सं संसं सं./ITA Nos.63 & 64/ASR/2021 (िनधा&रण िनधा&रणिनधा&रण िनधा&रण वष& वष&वष& वष& / Assessment Years: 2018-2019 & 2019-2020) Vinko Auto Industries Limited, Village Raowali, PO.Nurpur, Jalandhar-144012 Vs DCIT, CPC, Bangalore PAN No. : AAACV 5325 Q (अपीलाथ) /Appellant) .. (*+यथ) / Respondent) िनधा&,रती क- क-क- क- ओर ओरओर ओर से सेसे से /Assessee by : Shri Sandeep Vijh, CA राज$व क- क-क- क- ओर ओरओर ओर से सेसे से /Revenue by : Shri S.M.Surendranath, Sr.DR सुनवाई क- तार"ख / Date of Hearing : 08/11/2021 घोषणा क- तार"ख/Date of Pronouncement : 08/11/2021 आदेश आदेशआदेश आदेश / O R D E R Per N. K. Choudhry, JM The assessee has preferred these appeals against the separate orders dated 28.06.2021 impugned herein passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi, for the assessment years 2018-2019 & 2019-2020, u/s.250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). ITA Nos.63&64 /Asr/2021 2 2. The issue involved in the instant appeals relates to the deposit of employees’ contributions qua ESI & PF after the due date as prescribed in the relevant Acts, however, before the due date of filing of return of income u/s.139(1) of the Act, resulting into disallowance of Rs.5,88,203/- for A.Y.2018-2019 and Rs.60,540/- for A.Y.2019-2020 made by the A.O. 3. Against the above order of AO, the assessee preferred first appeals before the CIT(A), however, the CIT(A) sustained the additions made by the AO for the respective assessment years under consideration while dismissing both the appeals of the assessee. 4. Further feeling aggrieved, the assessee is in appeals before us. 5. Having heard the parties and perused the material available on record. The assessee raised the arguments against the impugned order, whereas the Ld. DR vehemently supported the same. The CIT(A) while upholding the disallowance/addition qua employees contributions towards PF & ESI mainly focused on two aspects/determinations- (i) non-applicability of the provisions of Section 43B of the Act to the employee’s share ITA Nos.63&64 /Asr/2021 3 qua PF & ESI and (ii) applicability of the amended provisions of Section 36(1)(va) and 43B of the Act wherein Explanations have been inserted by Finance Act, 2021. For better clarification and ready reference the Explanations 2 and 5 inserted in sections 36(1)(va) and Section 43B of the Act respectively, are reproduced herein, which reads 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 purposes of determining the “due date” under this clause.” Section 43B- “Explanation 5.—For the removal of doubts, it is hereby clarified that the provisions of this section shall not apply and shall be deemed never to have been applied to a sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 applies.” 5.1 We may observe that the ld. CIT(A) in its order at para no. 7.15 itself has observed that the issue has been highly contentious and different High Courts have taken divergent views on the same issue, out of which some are in favour of the assessee and some are against the assessee. The ld. CIT(A) further observed that the judgments and orders relied upon by the assessee have been rendered before the clarificatory amendments made in the Finance Act, 2021 and the Finance Act, 2021 has put an end to this controversy. ITA Nos.63&64 /Asr/2021 4 5.2 Admittedly there is plethora of judgments in favour of the Assessee’s contention and of the Revenue. The controversy with regard to divergent views of different High Courts, has been settled by the Hon'ble Apex Court in the case of CIT Vs. M/s. Vegetables Products Ltd. (88 ITR 192) by laying the dictum that if two reasonable constructions of a taxing provision are possible that construction which favours the Assessee must be adopted. The Hon’ble jurisdictional High Court in the case of CIT Vs. M/s Hemla Embroidery Mills (P) Ltd. (366 ITR 167) (P&H HC) and in the case of CIT Vs. M/s Mark Auto Industries Ltd. (358 ITR 43) (P&H HC) clearly held that the assessee is entitled to claim deduction of employee’s share of ESI & PF u/s.43B of the Act, if the same has been deposited prior to the filing of return of income u/s.139(1) of the Act. From the above judgments of the Hon’ble jurisdictional High Court, it is clear that the Hon’ble Court has not drawn any distinction between the employee’s and employer’s share qua PF & ESI contributions. Admittedly there are no contrary judgements of the jurisdictional High Court against the assessee on the aspect under consideration hence, first determination of the Ld. CIT(A) qua non-applicability of the provisions of Section ITA Nos.63&64 /Asr/2021 5 43B of the Act to the employee’s share qua PF & ESI, is unsustainable. 5.3 Now, coming to the second aspect/determination made by the CIT(A) to the effect that the amendment made in Section 36(1)(va) and 43B of the Act by Finance Act 2021 has to be considered as clarificatory in nature and having retrospective effects, therefore would be applicable to the previous assessment years as well. We may observe that various benches of the ITAT including Hyderabad Bench in the case of Value Momentum Software Services Pvt. Ltd. (ITA No.2197/Hyd/2017 decided on 19.05.2021), have taken into consideration the identical issue qua applicability of the amendment to Section 36(1)(va) and Section 43B of the Act, by inserting Explanations by the Finance Act, 2021 and clearly held that the amendment shall be applicable from 1 st April, 2021 onwards . It is also relevant to note that the CBDT has also issued Memorandum of Explanation qua applicability of the amended provisions of Section 36(1)(va) & 43B of the Act w.e.f. 1 st April, 2021, and Assessment Year 2021-21 onwards, hence there is no doubt qua applicability of the amended provisions referred above, prospectively. ITA Nos.63&64 /Asr/2021 6 On the aforesaid discussion, the second aspect as considered/determined by the ld. CIT(A) qua retrospective application of the amended provisions of Section 36(1)(va) and 43B of the Act wherein Explanations have been inserted by Finance Act, 2021 qua employees’ share in respect of PF & ESI Act, is also unsustainable . 5.4 In view of the above discussions, the disallowances of Rs.5,88,203/- for A.Y.2018-2019 and Rs.60,540/- for A.Y.2019-2020 made by the A.O. and confirmed by the CIT(A) are not sustainable and, hence, the same stands deleted. 6. In the result, both the appeals of the assessee are allowed. Order pronounced in the open court on 08/11/ 2021. Sd/- Sd/- (एन एनएन एन. .. . के केके के. .. . सैनी सैनीसैनी सैनी) (N. K. SAINI) (एन एनएन एन. .. .के केके के. .. .चौधर" चौधर"चौधर" चौधर") (N.K.CHOUDHRY) उपा य उपा य उपा य उपा य / VICE PRESIDENT याियक याियक याियक याियक सद$य सद$यसद$य सद$य / JUDICIAL MEMBER 6दनांक Dated 08/11/2021 Prakash Kumar Mishra, Sr.PS(on tour) आदेश आदेशआदेश आदेश क- क-क- क- *ितिल7प *ितिल7प*ितिल7प *ितिल7प अ8े7षत अ8े7षतअ8े7षत अ8े7षत/Copy of the Order forwarded to : आदेशानुसार आदेशानुसारआदेशानुसार आदेशानुसार/ BY ORDER, (Assistant Registrar) 1. अपीलाथ) / The Appellant- Vinko Auto Industries Limited, Village Raowali, PO.Nurpur,Jalandhar-144012 2. *+यथ) / The Respondent- DCIT, CPC, Bangalore 3. आयकर आयु9(अपील) / The CIT(A), 4. आयकर आयु9 / CIT 5. 7वभागीय *ितिनिध, आयकर अपीलीय अिधकरण, अमृतसर अमृतसरअमृतसर अमृतसर / DR, ITAT, Amritsar 6. गाड& फाईल / Guard file. स+या7पत *ित //True Copy// ITA Nos.63&64 /Asr/2021 7 आयकर आयकरआयकर आयकर अपीलीय अपीलीयअपीलीय अपीलीय अिधकरण अिधकरणअिधकरण अिधकरण, अमृतसर अमृतसरअमृतसर अमृतसर/ Income Tax Appellate Tribunal, Amritsar