| The Tax Publishers2022 TaxPub(DT) 1943 (Bang-Trib) INCOME TAX ACT, 1961
Section 36(1)(va) Section 43, Proviso
Amendment to section 36(1)(va) and section 43B by Finance Act, 2021 is not clarificatory in nature and mere use of the expression 'it is clarified' cannot be determinative of the nature of the amendment made. Furthermore, legislature had expressly given only prospective effect to these Explanations as was evident from the Memorandum Explaining the Provisions in Finance Bill, 2021, by stating that said amendment, i.e., the insertion of another Explanation to the already existing Explanation to clause (va) to sub-section (1) of section 36 of the Act, would take effect from 1-4-2021 and would accordingly apply to the assessment year 2021-22 and subsequent assessment years. Therefore, amended provisions of section 43B as well as section 36(1)(va) were not applicable for the assessment year under consideration, i.e., assessment year 2018-19 and employees' contribution paid by the assessee before the due date of filing of return of income under section 139(1) was allowable as deduction.
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Business deduction under section 36(1)(va) - Employees' contributions towards PF/ESIC - Payment beyond due date under respective Acts but within due date under section 139(1) - AO relied on amendment to sections 36(1)(va) and 43B by Finance Act, 2021 w.e.f. 1-4-2021
AO disallowed deduction under section 36(1)(va) on account of late remittance of employees' contribution to PF and ESI under respective Acts. Assessee contended that had paid employees' contribution prior to due date of filing of return under section 139(1). AO relied on amendment to section 36(1)(va) and section 43B by Finance Act, 2021 and thus rejected assessee's plea. Held: Amendment to section 36(1)(va) and 43B by Finance Act, 2021 is not clarificatory in nature and mere use of the expression 'it is clarified' cannot be determinative of the nature of the amendment made. Furthermore, legislature had expressly given only prospective effect to these Explanations as was evident from the Memorandum Explaining the Provisions in Finance Bill, 2021, by stating that said amendment, i.e., the insertion of another Explanation to the already existing Explanation to clause (va) to sub-section (1) of section 36 of the Act, would take effect from 1-4-2021 and would accordingly apply to the assessment year 2021-22 and subsequent assessment years. Therefore, amended provisions of section 43B as well as section 36(1)(va) were not applicable for the assessment year under consideration and employees' contribution paid by the assessee before the due date of filing of return of income under section 139(1) was an allowable deduction.
Followed:Essae Teraoka (P) Ltd v. Dy. CIT (2014) 366 ITR 408 (Karn) : 2014 TaxPub(DT) 1218 (Karn-HC). Distinguished:CIT-I, Ahmedabad v. Gold Coin Health Food (P) Ltd. (2008) 304 ITR 308 (SC) : 2008 TaxPub(DT) 2223 (SC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2018-19
IN THE ITAT, BANGALORE BENCH
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