Income Tax Appellate Tribunal - Chandigarh
Sh. Jagmohan Singh, Solan vs Dcit-Cpc/Dcit,Circle, Parwanoo on 15 December, 2021
ए", च डीगढ़
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ "ए
IN THE INCOME TAX APPELLATE TRIBUNAL,
CHANDIGARH BENCH 'A, CHANDIGARH
BEFORE: SHRI SUDHANSHU SRIIVASTAVA, JUDICIAL MEMBER
AND SHRI VIKRAM SINGH YADAV, ACCOUNTANT MEMBER
ITA Nos. 185 & 193/Chd/2021
(Assessment Years: 2018-19 & 2019-20
Sh. Jagmohan Singh, बनाम D.C.I.T., CPC,
Plot No.76, Thana, Solan Bengaluru.
Himachal Pradesh.
थायी लेखा सं./PAN NO: AKNPS4042H
नधा रती क ओर से/Assessee by: Shri Parikshit Aggarwal, CA
राज व क ओर से/ Revenue by : Smt.Priyanka Dhar, Sr.DR
सन
ु वाई क तार ख/Date of Hearing: 08.12.2021
उदघोषणा क तार ख/Date of Pronouncement: 15.12.2021
(Hearing through Webex)
आदे श/ORDER
Per Vikram Singh Yadav, Accountant Member:
These are two appeals filed by the assessee against the order of Learned Commissioner of Income Tax ( Ap p e a l s) , N a ti ona l F a ce le ss Ap p e a l C e ntre D e l hi [ in s hor t th e 'Ld .
C I T( A) , N F AC ' ] Delhi, passed u/s 250 of the Income Tax Act, 1961 (in short 'the Act') dated 06.07.2021 for assessment year 2018-19 and dated 28.07.2021 for assessment yea r 2019-20 respectively.
2 ITA Nos185 & 193/Chd/2021 A.Ys.2018-19 & 2019-20
2. S in ce c om mo n i ssu e s a re i nv olv e d in b ot h th e a ppe a ls, the se we re he a rd toge the r a n d a re be in g di sp ose d of f b y t hi s con sol id a t e d or de r . F or the p ur pos e of p re se nt di sc us si on wi th t he con se nt of b ot h the p a r ti e s, the c a se of the a sse sse e in I TA N o. 18 5 /C h d /2 0 2 1 i s ta k e n a s the le a d c a se .
ITA N o. 18 5 /C hd /20 21 ( A.Y .2 01 8- 19 )
3. B r i e f ly, t he fa c ts of th e c a se a re tha t the a s se s see f il ed hi s r e tur n o f in come on 1 8 . 10 . 20 1 8 d e c la ri n g t ota l i nc ome of Rs .3 9 ,3 7 , 75 0 / - w hi ch w a s p r o ce sse d u /s 1 4 3 ( 1 ) of th e Act a nd i n te r ms of i nt ima ti on u/ s 1 43 ( 1 ) d a te d 17. 0 5. 2 0 19 is sue d by CPC, it ma d e di s a ll ow a n ce of R s.11 , 99 , 7 10 /-
tow a r ds e mpl oy ee s ' c ont ri b ut ion tow a r ds E SI a n d P F .
4. O n a p p e a l , the Ld . C I T( A) , N F AC h a s co nf ir me d th e di sa l l ow a nc e ma d e u/s 14 3 ( 1) of th e A ct o n a c cou nt of a sse sse e 's fa i l ure to p a y t he e mp loy ee s ' con tr i bu ti on o f ES I & P F w ith i n th e p re s cr ibe d d ue d a te un d e r the re le v a nt Sta t ute a s p e r se cti on 3 6( 1 )( v a ) of th e A ct. Aga i n st th e s a id or de r , the a s se s se e ha s n ow c ome in a pp e a l be fo re u s.
5. D ur i ng th e co urse of he a r in g, the Ld . A R s ub m i tte d tha t t he a s se sse e h a s de p osi te d e mpl oye e s ' con tr ib u ti on tow a r ds ES I a n d P F th oug h w i th t he de la y of f e w d a ys fr om 3 ITA Nos185 & 193/Chd/2021 A.Ys.2018-19 & 2019-20 the d ue da te me nti on e d i n the res pe cti ve St a tute s, h ow e ve r , the sa me w a s dep osi te d we ll be f or e the d ue d a te o f f il i ng of re tur n of in come u/s 1 3 9 ( 1) of th e Ac t. I t w a s s ub mi tte d tha t th e sa i d fa ct is n ot u nde r d is p ute a n d wh e re suc h con tr ib u tio n ha s b ee n de p osi te d be fore the due d a te of fi lin g of the re t ur n of inc ome , n o d i sa l low a n ce u/s 3 6 (1 ) ( va ) of the Act ca n be ma de . In su pp or t, r e li a nce wa s p l a ce d on de ci si on o f the Hon 'b l e Ra j a sth a n Hi gh C ou r t in th e c a se of C I T V s. Ra j a st ha n S ta te B e ve r a ge s C or p or a ti on Lt d . (2 0 1 7 ) 39 2 I TR 2 , a ga i n st w hi ch S LP fi l e d b y t he Re ve n ue ha s b ee n di smi ss e d b y th e Hon 'b le Su pr e me C o ur t, a s r e p or te d in PC I T Vs . Ra j a s th a n St a te Be ve ra ge s C or po ra t io n Ltd . (2 0 1 7 ) 25 0 Ta x ma n 1 6 . I t w a s f ur the r su bmi tte d th a t si mi lar vi e w ha s b ee n ta ke n by the H on' ble Ju ri sd i cti on a l H i ma ch a l Pr a d e s h H ig h Cou r t in the c a se o f CI T Vs . M /s N i p so Pol yf a b r ik s Lt d. ( 20 0 8 ), I TA N o.7 3 of 20 0 8 . S i mi l a r ly , the Hon 'b l e P u nj a b & H a r ya n a H ig h C our t in t he ca s e o f C I T Vs .
Ra i Agr o I n du stri e s Ltd . (2 0 1 1) , 3 3 4 I TR 1 2 2 ha s ta k e n a si mil a r v ie w . It was fu rt he r su b mit te d t ha t th e Ja ip ur B e n che s of the Tr i bu na l h a s a l so t a ke n a s imi l a r vi e w i n the ca se of M/s Pe e Te e Tu r ne r s Vs. As si sta n t D ir e ctor of C P C , I TA N o. 10 5 / JP /2 0 2 1 , da te d 2 8 .1 0. 2 02 1 w h e re i n the re le va n t fi nd i ng s re a d a s u nd e r :
4 ITA Nos185 & 193/Chd/2021 A.Ys.2018-19 & 2019-20 "5. We have heard the rival contentions and purused the material available on record. In case of Mohangarh Engineers and Construction Company vs DCIT, CPC (Supra), speaking through one of us, we have extensively dealt with the identical matter relating to employee's contribution towards ESI/PF and our findings therein read as under:
"13. We have heard the rival contentions and perused the material available on record. On perusal of the details submitted by the assessee as part of its return of income, it is noted that the assessee has deposited the employees's contribution towards ESI and PF well before the due date of filing of return of income u/s 139(1) and the last of such deposits were made on 16.04,2019 whereas due date of filing the return for the impugned assessment year 2019-20 was 31.10.2019 and the return of income was also filed on the said date. Admittedly and undisputed//, the employees's contribution to ESI and PF which have been collected by the assessee from its employees have thus been deposited well before the due date of filing of return of income u/s 139(1) of the Act.
14. The issue is no more res Integra in light of series of decisions rendered by the Hon'ble Rajasthan High Court starting from CIT vs. State Bank of Bikaner & Jaipur (supra) and subsequent decisions.
15. In this regard, we may refer to the initial decision of Hon'ble Rajasthan High Court in case of CIT vs. State Bank of Bikaner & Jaipur wherein the Hon'ble High Court after extensively examining the matter and considering the various decisions of the Hon'ble Supreme Court and various other High Courts has decided the matter in favour of the assessee. In the said decision, the Hon'ble High Court was pleased to held as under:
"20. On perusal of Sec.36(l)(va) and Sec.43(B)(b) and analyzing the judgments rendered, in our view as well, it is clear that the legislature brought in the statute Section 43(B)(b) to curb the activities of such tax payers who did not discharge their statutory liability of payment of dues, as aforesaid; and rightly so as on the one hand claim was being 5 ITA Nos185 & 193/Chd/2021 A.Ys.2018-19 & 2019-20 made under Sect/on 36 for allowing the deduction of GPF, CPF, ESI etc. as per the system followed by the assessees in claiming the deduct/on i.e. accrual basis and the same was being allowed, as the liability did exist but the said amount though claimed as a deduction was not being deposited even after lapse of several years. Therefore, to put a check on the said claims/deductions having been made, the said provision was brought in to curb the said activities and which was approved by the Hon'ble Apex Court in the case of Allied Motors (P) Ltd. (supra).
21. A conjoint reading of the proviso to Section 43-B which was inserted by the Finance Act, 1987 made effective from 01/04/1988, the words numbered as clause (a), (c), (d), (e) and (f), are omitted from the above proviso and, further more second proviso was removed by Finance Act, 2003 therefore, the deduction towards the employer's contribution, if paid, prior to due date of filing of return can be claimed by the assessee. In our view, the explanation appended to Section 36(1 )(va) of the Act further envisage that the amount actually paid by the assessee on or before the due date admissible at the time of submitting return of the income under Section 139 of the Act in respect of the previous year can be claimed by the assessee for deduction out of their gross total income. It is also clear that Sec. 43B starts with a notwithstanding clause & would thus override Sec. 36(1) (va) and if read in isolation Sec. 43B would become obsolete. Accordingly, contention of counsel for the revenue is not tenable for the reason aforesaid that deductions out of the gross income for payment of tax at the time of submission of return under Section 139 is permissible only if the statutory liability of payment of PF or other contribution referred to in Clause (b) are paid within the due date under the respective enactments by the assessees and not under the due date of filing of return.
22. We have already observed that till this provision was brought in as the due amounts on one pretext or the other were not being deposited by the assessees though substantial benefits had been obtained by them in the shape of the amount having been claimed as a deduct/on but the said 6 ITA Nos185 & 193/Chd/2021 A.Ys.2018-19 & 2019-20 amounts were not deposited. It is pertinent to note that the respective Act such as PF etc. also provides that the amounts can be paid later on subject to payment of interest and other consequences and to get benefit under the Income Tax Act, an assessee ought to have actually deposited the entire amount as also to adduce evidence regarding such deposit on or before the return of income under sub-section (1) of Section 139 of the IT Act.
23. Thus, we are of the view that where the PF and/or EPF, CPF, GPF etc., if paid after the due date under respective Act but before filing of the return of income under Section 139(1), cannot be disallowed under Section 43B or under Section 36(l)(va) of the IT Act."
16. The said decision has subsequently been followed in CIT vs. Jaipur Vidyut Vitran Nigam Ltd, (supra), CIT vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. (supra), and CIT vs Rajasthan State Beverages Corporation Limited (supra). In all these decisions, it has been consistently held that where the PF and ESI dues are paid after the due date under the respective statues but before filing of the return of income under section 139(1), the same cannot be disallowed under section 43B read with section 36(l)(va) of the Act.
17. We further note that though the Id.CIT(A) has not disputed the various decisions of Hon'ble Rajasthan High Court but has decided to follow the decisions rendered by the Hon'ble Delhi, Madras, Gujarat and Kerala High Courts. Given the divergent views taken by the various High Courts and In the instant case, the fact that the jurisdiction over the Assessing officer lies with the Hon'ble Rajasthan High Court, in our considered view, the Id CIT(A) ought to have considered and followed the decision of the jurisdictional Rajasthan High Court, as evident from series of decisions referred supra, as the same is binding on all the appellate authorities as well as the Assessing officer under its jurisdiction in the State of Rajasthan.
18. In light of aforesaid discussion and in the entirety of facts and circumstances of the case, the addition by way of adjustment while processing the return of income u/s 143(1) amounting to Rs 4,38,530/- so made by the CPC towards the delayed deposit of the employees's 7 ITA Nos185 & 193/Chd/2021 A.Ys.2018-19 & 2019-20 contribution towards ESI and PF though paid well before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted as the same cannot be disallowed under section 43B read with section 36(l)(va) of the Act in view of the binding decisions of the Hon'ble Rajasthan High Court."
6. 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 Id D/R has referred to the explanation to section 36(l)(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 express wordings in the said memorandum which says "these amendments will take effect from 1st 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 (supra) wherein it has 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 sect/on 43B and 36(l)(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(l)(va) as well as section 43B is applicable only from 01,04.2021. These provisions impose a liability on an assessee and theref ore cannot be construed as applicable with retrospective effect unless the legislature specifically says so. In the decisions 8 ITA Nos185 & 193/Chd/2021 A.Ys.2018-19 & 2019-20 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 that the impugned additions made under section 36(l)(va) of the Act in both the Assessment Years deserves to be deleted. "
7. In light of the aforesaid discussions and in the entirety of facts and circumstances of the case and following the consistent decisions taken by the various Benches of the Tribunal, the addition by way of adjustment while processing the return of income u/s 143(1) amounting to Rs 6,28,972/- so made by the CPC towards the deposit of the employees's contribution towards ESI and PF though paid before the due date of filing of return of income u/s 139(1) of the Act is hereby directed to be deleted."
6. I t w a s f ur the r su b mit te d tha t s imi l a r v ie w h a s b ee n ta k e n b y th e I TA T C h a n d i ga r h B e nc he s in nu mbe r o f ca s e s a nd our re fe re n ce w a s dr a w n to th e de ci si on in the c a se of M /s C iti C e n tr e De ve lope rs V s. CPC in I TA N o.1 2 6 /C hd /2 0 2 1 d a te d 2 8. 1 0.2 0 21 . It was ac cor d in gl y sub mi tte d th a t d i sa l lo wa n ce so ma d e ma y b e d i re ct e d to be de le te d .
7. P e r c ont ra , t he Ld . D R r e l ie d up on th e a me nd me nt br ou gh t i n by th e F i na n ce Ac t, 20 2 1 w h e re i n Expla na ti on to se c tio n 36 ( 1 )( va ) of th e A ct ha s b ee n in tr od uc ed . I t w a s sub mi tte d tha t f ro m th e r e a d i ng of th e sa i d a me n d me nt i t is e vi de n t th a t the l a w i s a nd ha s a l wa y s b ee n ve r y cl e a r th a t e mp loy ee s ' c ont r ib u tio n to s pe ci fi e d fu nd w i l l not b e a ll owe d a s d e d uc ti on u /s 3 6 (1 ) (v a ) o f th e A ct i f t he re is d e l a y in de po si t e ve n b y a s in gl e d a y a s p e r the d ue d a tes s pe ci fied 9 ITA Nos185 & 193/Chd/2021 A.Ys.2018-19 & 2019-20 in th e re spe c ti ve Sta t ute s. I t w a s fu rt he r sub mi tte d th a t th e sa i d a me n d me nt i s o nl y de cl a r a tor y/cl a r i fi ca t or y i n na t ure a nd , i s, th e re f ore , a p p l ic a ble with r e tr os pe cti ve e ffe ct b y ne ce s sa r y in te n dme n t of d ee mi n g n a tu r e e xp re ss ly s ta te d the re i n. The Ld . DR a cc or di n gl y su b mit te d th a t i n vi e w of the un a mb ig uou s w or d in g o f th e now a me nd me n t p r ovi s ion s of se c ti ons 3 6 (1 ) (v a ) a nd 4 3 B , i t i s c le a r th a t t he emp l oye e s' con tr ib u tio n c a n b e a ll owe d a s a d e d u cti on onl y i f i t ha d be e n pa i d w it hi n t he p r e s cr i bed d ue d a te s u nd e r the re le va n t S ta tu te s a n d th is p osi ti o n ha s b e e n c la r i fie d by the a for e s a i d a me ndme n t. I t w a s a ccor d i ng ly sub m i tte d th a t the re i s n o i n fi r mit y i n the or d er p a ss e d b y the Ld .C I T(A ) wh e re in he h a s s us ta in e d the di sa ll ow a nc e ma d e u/s 1 43 ( 1 ) of the A ct, b y the C P C o n a ccoun t of a s se s se e 's fa i l ur e to pa y t he e mpl oy ee s ' con tr ib u ti on tow a r d s ES I a n d P F wi th in the p re sc ri be d d u e d a te s a s p e r se cti on 3 6( 1 ) (v a ) o f t he Act .
He a c cor d in gl y su pp or te d the or de r o f the l owe r aut hor i ti e s.
8. W e h a ve h e a r d th e ri va l c on te n tions a n d p e r us e d the ma te r i a l a va i la b l e on re co rd . I n the i ns ta nt ca se , i t i s no t i n di sp u te tha t e mp l oye e s' con tr i b ution to ES I a n d P F c oll e c te d by the a ss e ssee fr om i ts e mpl oye es ha d b e e n de p os ite d we l l be fore t he due da te o f f il i ng o f ret ur n o f i nc ome u/s 1 39 ( 1 ) of t he Ac t. We f ind th a t t he is sue i s sq u a re l y co ver e d by the de ci si ons of th e H on' bl e Ra j a s tha n Hi gh C our t, Ho n'ble 10 ITA Nos185 & 193/Chd/2021 A.Ys.2018-19 & 2019-20 Hi ma ch a l P r a d e sh H i gh C o ur t a s we ll a s Ho n'b le Pu n ja b & Ha r ya n a H i gh C o ur t. W e fu r th e r not e th a t th oug h t he I d .
C I T( A) h a s no t d i sp ut e d the var i ou s de ci si ons of H on'b le Hi gh C our ts in cl ud i ng the de cisi on o f th e j ur isd i cti on a l Hi ma ch a l P ra de sh H ig h C o ur t but has re fe rr e d to the a me nd me nt b r ou gh t i n b y the Fin a nc e A ct, 2 0 21. It is a con si ste nt p osi tion a c ro ss va r i ou s B e nc he s of th e Tr i b un a l in cl ud i ng C ha n d iga rh B e n che s tha t t he a me nd me n t w h ic h ha s b ee n b r ou ght i n by the Fi n anc e A ct, 2 0 2 1 sh a l l a p pl y w. e . f. a sse s sme nt ye a r 2 02 1 -2 2 a nd s ub se q ue n t a s se s sme n t ye a r s a n d the imp ugn e d a ss e ssme n t ye a r be i ng a s se s sme n t ye a r 2 0 1 8-1 9 , the sa i d a me n d men t ca n n ot b e a p pl ie d in the in sta n t ca se . The re fore , con si de r ing th e e n tire ty of fa c ts a nd ci rc ums ta nc e s of t he ca se a nd fol l ow in g th e de ci si on s of va r io us Hi gh C ou r ts a s w e ll a s C oor d i na te Be n ch e s of the Tr i b un a l re fe rre d a b ove , the add i ti on ma de by way of a dj us tme n t w h il e pr oce s si ng the re tu r n of i ncome u/s 14 3 ( 1) of the Act , a mou nti n g to R s .1 1 ,9 9 ,7 1 0 /- so ma d e b y the C PC t ow a rd s t he d e po si t of e mpl oye e s ' con tr ib u tio n tow a r ds ES I a n d P F p a i d b e f ore th e d ue d a te of fil in g of the re tur n of i nc ome u/ s 1 39 ( 1 ) of th e A ct, i s he re by d i re cte d to be de le te d .
9. Th e a p p e a l of th e a sse sse e is a c cor d i ng ly a l low e d.
11 ITA Nos185 & 193/Chd/2021 A.Ys.2018-19 & 2019-20 ITA N o. 19 3 /C hd /20 21 ( A.Y .2 01 9- 20 ) 10 . I n th is ca s e , b oth the p a rt ie s f a irl y s ub mi tte d th a t th e fa ct s a nd ci r cu msta n ce s of th e ca s e a re e x a ctly i de nti ca l a nd si mi la r c ont e nt ion s a s r a ise d i n I TA N o. 1 85 / C h d /20 2 1 , ma y b e c ons id e re d. Th e r e f ore , our f in d in gs a nd d i r e cti on s con ta i ne d in I TA N o. 1 85 /C h d / 20 2 1 sh a l l a pp l y mu ta ti s mu ta n d i s in th e i n sta n t c a se a nd th e a p pe a l of th e a sse ssee is a l lo w e d .
11 . I n the re s ul t, b oth the a p pe a l s fi l ed b y th e a sse ssee a re a ll ow e d .
O r d e r p r on o u n ce d o n 1 5 . 12 . 2 0 2 1 .
Sd/- Sd/- (SUDHANSHU SRIVASTAVA) (VIKRAM SINGH YADAV) याय क सद य/Judicial Member लेखा सद य/Accountant Member Dated: 15.12.2021 *रती*
आदे श क % त&ल'प अ*े'षत/ Copy of the order forwarded to :
1. अपीलाथ+/ The Appellant
2. %,यथ+/ The Respondent
3. आयकर आयु-त/ CIT
4. आयकर आयु-त (अपील)/ The CIT(A)
5. 'वभागीय % त न0ध, आयकर अपील य आ0धकरण, च2डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदे शानस ु ार/ By order, सहायक पंजीकार/ Assistant Registrar