PANKAJ AGARWAL, JAMSHEDPUR V. INCOME TAX OFFICER, WARD-1(1), JAMSHEDPUR, JAMSHEDPUR

ITA 68/RAN/2021

• Counselvise Citation: [2022] 107 COUNSELVISE.COM (IT) 0988 (ITAT-RANCHI)
• Duration Of Justice: 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-08-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2019-2020
• Appeal Filed On: 29-11-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment; Set aside
• Section: 43B; 139(1)

Judgement Text

ITA No. 67 & 68/RAN/2021 A.Ys. 2018-2019 & 2019-2020 Pankaj Agarwal, Jamshedpur 1 IN THE INCOME TAX APPELLATE TRIBUNAL, ‘RANCHI’ BENCH, KOLKATA [VIRTUAL COURT HEARING AT KOLKATA] Before Shri Rajpal Yadav, Vice-President (KZ) & Shri Girish Agrawal, Accountant Member I.T.A. Nos. 67 & 68/RAN/2021 Assessment Years: 2018-2019 & 2019-2020 Pankaj Agarwal,........................................................................Appellant M.E. School Road, Jugsalai, Jamshedpur-831006, Jharkhand [PAN: AMNPA7621E] -Vs.- Income Tax Officer,...................................................................Respondent Jamshedpur, Office of the Income Tax Officer-1(1) 47, C.H. Area, Jamshedpur, Jharkhand-831001 Appearances by: Shri Akshay Ringasia, A.R., appeared on behalf of the assessee Shri Pranob Koley, Sr. D.R., appeared on behalf of the Revenue Date of concludin g th e hearin g : Au gus t 02, 2022 Date of pro nouncin g the orde r : Au gus t 02, 2022 Per Rajpal Yadav, Vice-President (KZ):- CA Akshay Rin gasi a, ld. Authorised Re presen tati ve of the asse ssee has file d an appli cation date d 16 t h June, 2022 for grant of out of turn hearin g. The ld. A.R. for the assesse e sub mitte d that the on ly issue involve d in the appeals re lates to con fi rmation of additi ons of Rs.8, 23,764/- (for Asse ssment Year 2018-19) an d Rs.3,87,239/- (for Asse ssment Year 2019-20), which were added b y the ld. Assessin g Office r with the ai d of se ction 36(1)(va) re ad with secti on 2(24)(x) on the ITA No. 67 & 68/RAN/2021 A.Ys. 2018-2019 & 2019-2020 Pankaj Agarwal, Jamshedpur 2 ground that e mployee s’ contrib utions towards PF & ESI we re n ot deposite d by the assessee within the due date p rovide d unde r the se two Acts. Ld. A.R. for the asse ssee sub mitte d that these payme nts have bee n made be fore the due date of fi lin g of the return and, therefore, the i ssue is cove re d b y the decisi on of the H on’ble J uri sdicti onal H igh Court in the case of (i) CIT –vs.- Vijayshree Ltd. i n ITAT No. 243 of 2011 & GA No. 26607 of 2011;(ii) CIT –vs.- P hi lips Carbon Black Ltd. in GA No. 1382 of 2014 & ITAT 31 of 2014; (iii ) CIT –vs. - M/s. Coal In dia Ltd. in ITA 12 of 2015 an d (i v) M/s. Akzo Nobe l In dia Ltd. –vs.- CIT i n ITA No. 110 of 2011. Thi s aspe ct has bee n con si dere d by the Coordin ate Bench in the case of Lumin o In dustries L td. –vs.- ACIT (ITA No. 231 & 365/KOL /2021). 2. On the other hand, ld. S r. D. R. conten de d that sin ce it is only an early he ari ng app lication, he is not possessi ng the fi les. But afte r consi de rin g the smallne ss of the issue involved in the appeals, more so, being cove re d by the H on’b le J urisdictional Hi gh Court, we allow this prayer of the assessee for grant of out of turn hearin g and take up the appeals for hearin g today itse lf i.e. 2 n d August, 2022. 3. We p rocee d to de ci de the appeals on meri t also. We have re cently deci de d a large n umbe r of appeals on this issue. Recently we have consi de re d this asp ect in ITA Nos. 531 & 532/KOL/2021, where in we took note of the earlie r orde r of ITAT, Kolkata dated 09.03. 2022 whereby the Tri bunal con sidere d the i mpact of ame ndment b rought into se ction 36(1) as well as 43B b y Finance Act, 2021. The discussion made in that order read as under: “3. On due consideration of the above facts and circumstances, we find that ITAT, Kolkata has duly examined the amendment brought in by virtue of Finance Act, 2021. On the proposition and the discussion made by the ITAT in the case of Lumino Industries Limited & Others 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 effect from 1 st April, 2021 i.e AY 2021- ITA No. 67 & 68/RAN/2021 A.Ys. 2018-2019 & 2019-2020 Pankaj Agarwal, Jamshedpur 3 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) 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 ITA No. 67 & 68/RAN/2021 A.Ys. 2018-2019 & 2019-2020 Pankaj Agarwal, Jamshedpur 4 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”. 4. A perusal of the above would reveal that the ITAT, Kolkata has specifically propounded that if employees’ contribution received by an assessee and paid to ESI and PF accounts before the due date of filing of the return, then the assessee will be eligible to claim the deduction of such amounts. With the assistance of ld. representatives, we have specifically gone through the record and find that payments have been made within the due dates of filing of the return. With the above observation, these appeals of the assessee are treated as allowed. The disallowances stand deleted in both the appeals”. 4. Respectfully followi ng the orde r of the Coordinate Ben ch, we allow both the appeals of the assessee and de lete the di sallowan ces. 5. In the result, both the appeals of the assessee are allowed. Orde r p ronounce d i n the open Court on August 02, 2022. Sd/- Sd/- (Girish Agrawal) (Rajpal Yadav) Accountant Member Vice-President (KZ) Kolkata, the 2 nd day of August, 2022 Copies to : (1) Pankaj Agarwal, M.E. School Road, Jugsalai, Jamshedpur-831006, Jharkhand (2) Income Tax Officer, ITA No. 67 & 68/RAN/2021 A.Ys. 2018-2019 & 2019-2020 Pankaj Agarwal, Jamshedpur 5 Jamshedpur, Office of the Income Tax Officer-1(1) 47, C.H. Area, Jamshedpur, Jharkhand-831001 (3) Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC)- Delhi, (4) The Departmental Representative (5) Guard File TRUE COPY By order Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.