Latest Amendment to Sec 36(1)(va) and 43B of Income Tax Act has no Retrospective Effect: ITAT allows Deduction [Read Order]

Latest Amendment – Amendment - S. 36(1)(va) - 43B of Income Tax Act - Income tax act - Retrospective Effect – ITAT – Deduction - Taxscan

The Bangalore bench of the Income Tax Appellate Tribunal (ITAT), while allowing deduction to the assessee, M/s BI Worldwide India Pvt. Ltd, held that the latest amendment to section 36(1)(va) and 43B of Income Tax Act, 1961 as per the Finance Act, 2021 has prospective effect only.

The assessee, a private limited company, files its return of income for the assessment year 2018-19 declaring a total income of Rs.20,12,34,160/-. The return was processed u/s 143(1) of the Income-tax Act. In the intimation issued u/s 143(1) of the Act, the CPC made an adjustment of the employees’ contribution to PF and ESI to the tune of Rs.9,45,931/- on the ground that the assessee did not remit the employees’ contribution to PF and ESI within the due date specified under the respective Acts.

While ruling in favour of the assessee, the Tribunal bench comprising Accountant Member Mr. B R Bhaskaran and Judicial Member Ms. Beena Pillai relied on a catena of judgments where the Court allowed relief to the assessee while dealing with a similar issues.

“In view of the judicial pronouncements cited supra, we hold that the amendment to section 36(1)(va) and 43B of the Act will not have application for the relevant assessment year, namely assessment year 2018-2019. Accordingly, we direct the A.O. to grant deduction in respect of employees’ contribution to PF and ESI since the assessee made the payment before the due date of filing of return u/s 139(1) on 30.11.2018 of the Act. Accordingly, grounds raised by assessee stands allowed,” the bench said.

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