ITAT allows Deduction as Amendment in Section 36(1) (va) only Applicable from April 1st Onwards [Read Order]

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) recently allowed the deduction due to amendment in Section 36(1)(va) of Income Tax Act, 1961 is only applicable from April 1st onwards.

The assessee, Mahindra and Mahindra Financial Services Limited, could not deposit the employees' contribution to the provident fund within the time allowed by the prescribed Act for various reasons. However, the assessee had deposited the amount before filing the income tax return under Section 139(1) of the Income Tax Act, despite a delay in depositing the employees' contribution to the provident fund.

The assessee had complied with the provisions of law and deposited the contributions before the due date of filling the Return of income under Section 139(1) of the Income Tax Act which cannot be disputed.

The counsel for the assessee submitted that the amendment is retrospective applicable but the assessee submissions are that the amendment had come with effect from 01.04.2021 and the same is applicable prospectively. The fact remains that the   provisions/explanation was introduced in the Finance Act, 2021 which was effective from 01.04.2021.

The bench, consisting of two members, Judicial Member Pavan Kumar Gadale and Accountant Member Rifaur Rahman, observed that the amendment was brought in the Finance Act, 2021 with effect from 01.04.2021. The law was not framed/amended in the relevant Assessment year and any legal proposition which cast additional burden/liability on the assessee cannot be implemented retrospectively.

The amendment to Section 36(1)(va) of the Income Tax Act would not be applicable to Assessment Year 2019-20.

The assessee has deposited the employee’s contribution of provident fund before the due date under Section 139(1) of the Income Tax Act.

Accordingly, the Tribunal set aside the order of the CIT(A) and directed the Assessing Officer to delete the disallowance.

In result, the appeal filed by the assessee was allowed.

To Read the full text of the Order CLICK HERE

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