Amendment to Sections 36(1)(va) and 43B under Finance Act, 2021 has no Retrospective Effect: ITAT deletes Addition [Read Order]

The ITAT, Delhi bench, relying on a catena of decisions, has observed that amendment to Section 36 (1)(va) and Section 43B effected by Finance Act 2021 is having prospective effect, cannot be applied retrospectively.

The Assessing Officer made an of Rs. 6,75,582/- and Rs. 14,197/- respectively which, being the EPF and ESI deposited after the due date prescribed under Employees Provident Funds and miscellaneous Act 1952, but deposited before the due date of filing return of income u/s 139(1) of Income Tax Act.

The assessee contended that EPF amount of Rs. 6,75,582/- and ESI amount of Rs. 14,197/- which have been duly paid by the assessee before the due date of filing the return of income u/s 139(1) of the Income Tax Act, but the same was not deposited within the due date prescribed under the Employees Provident Fund and Miscellaneous Provisions Act, 1952.

The Revenue contended that the order of the AO and CIT(A) is well reasoned, further drawn our attention to the amendment to Section 36(1)(va)and Section 43(B) of Finance Act, 2021. According to them, the assessee has delayed payment of Employees Contribution PF/ESI, which is not allowable in view of amendment to Section 36(1)(va) and Section 43B of the Act effected by Finance Act, 2021.

The Tribunal bench comprising Shri Pradip Kumar Kedia, Accountant Member and Sh. Yogesh Kumar U.S., Judicial Member observed that the identical issue has been decided by the Hon’ble Delhi High Court in the case of Pr. CIT Vs. Pro interactive Service (India) Pvt. Ltd wherein the High Court allowed the plea of the assessee.

“The above said decision of the Jurisdictional High Court is binding on the Tribunal as ratio decidendi.,” the Tribunal observed.

While concluding, the Tribunal added that “The Coordinate Bench of the Tribunal in the Continental Restaurant Café Company Vs. ITO reported in (2021) 91 ITR 5(SN) 60 (Bang.) and Ananda Bhavan Sweets India Pvt. Ltd. Vs. ITA No. 402 and 403/Chny/2021 order dated 8/12/2021 has already held that, the said amendment to Section 39(1)(va) and Section 43B effected by Finance Act 2021 is having prospective effect. Since, the said amendment is having prospective effect and not being retrospective one the same cannot be applied to the present case.”

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