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2022 (12) TMI 286 - AT - Income TaxDisallowance of PF and ESI contribution deposited outside the statutory due date under said Act - amount paid before due date of filing the return - HELD THAT:- When the money is given by the employees, the employer is holding that money on behalf of the employees in the manner of good faith and trust. They are not part of the employers’ income, nor are they heads of deduction per se in the form of statutory pay out. In fact, they are others income, money, only deemed to be income with the object of ensuring that they are paid within the due date specified in that particular statute. Therefore, they have to be deposited in terms of such welfare enactment. It is open to deposit in terms of those statutes on or before the due date as mandated by such concerned law that the amount which is otherwise retained and is deemed income in the hands of the employer is therefore, treated as a deduction. Essentially the condition precedent for deduction is that therefore, such amounts which are held in trust for the employees should be deposited by the employer on or before the due date as prescribed under the relevant Statutes. The Hon'ble Supreme Court CHECKMATE SERVICES P. LTD. [2022 (10) TMI 617 - SUPREME COURT] further held that if this approach and reasoning is adopted then the non-obstante clause u/s 43B or anything contained in that provision would never absolve the assessee-employer from its liability to deposit employees’ contribution on or before the due date as mentioned in the respective enactments as a condition for deduction. In view thereof, the Hon'ble Apex Court upheld the findings of Hon'ble Gujarat High Court and also stated that the decisions of other Hon'ble High Courts holding to the contrary do not lay down the correct proposition of law. Reverting to the facts of the present case, it is an admitted fact that the payment of employees’ contribution to the provident fund was made before the due date of filing of return of income u/s 139(1) but beyond the due date as provided in the respective Statutes. Respectfully following the judgment of Hon'ble Supreme Court (supra) we hold that the assessee-employer was duty bound to deposit the employees’ contribution to provident fund within the due date as mentioned in the respective Statutes. Since this was not done the assessee is not entitled for deduction u/s 36(1)(va) read with section 43B of the Act and the said amount has to be construed as deemed income of the assessee and added to his total income. We do not find therefore, any infirmity with the findings of the Revenue authorities and the Grounds No. 1, 2 and 3 of assessee’s appeal of the assessee stands dismissed. Disallowance of deduction on Education cess and secondary and higher education cess - HELD THAT:- Following the aforesaid decisions and the Amendment taken place in the Statute with retrospective effect to section 40(a) we hold that payment of Education Cess including secondary and higher secondary education is not an allowable deduction. Ground No. 4 is dismissed.
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