The Jaipur Bench Income Tax Appellate Tribunal (ITAT) has held that amended provisions relating to income tax deduction towards contribution to ESI and PF applicable from 2021-22 assessment year onwards not retrospectively.
The assesse, Ajeet Singh challenged the order of the CIT(A), National Faceless Appeal Centre, confirming the addition of Rs. 12,84,590/- made by department under section 143(1) of the Act pertaining to employees contribution made towards ESI and PF which was paid by the appellant company after the “due date” under respective statute of ESIC/PF.
The appellant submitted that the CIT (A) has confirmed the disallowance, based on the amendments made in sec 36(1) and sec 43B of the Act by The Finance bill 2021, but the said amendments are prospective and applicable w.e.f. 01.04.2021 only and not applicable to the appellants case.
The appellant further submitted that that disallowance of Rs. 12,84,590/- was not in accordance with the provision of Section 43B of the Act as the said amount were duly remitted before the due date of filling of return of income. The appellant has referred to the decisions of various High Courts including the decision of jurisdictional Rajasthan High Court in the case of Rajasthan State Beverages Corporation.
The Tribunal by relying the decision of Supreme Court in Vatika Township Pvt. Ltd. observed that unless contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. The law passed today cannot be applied to the events of the past.
The Coram of Dr. S. Seethalakshmi and Sri Rathod Kamlesh Jayantbhai, has held that “we are of the view that the amendment brought in the statue i.e., by Finance Act, 2021, the provisions of Section 36(1)(va) r.w.s. 43B of the Act amended by inserting explanation 2 is prospective and not retrospective. Hence, the amended provisions of Section 43B r.w.s. 36(1)(va) of the Act are not applicable for the assessment year under consideration i.e. 2018-19 but will apply from assessment year 2021-22 and subsequent assessment years. Hence, this issue raised in assessee’s appeal is allowed”.
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