TMI Blog2020 (11) TMI 900X X X X Extracts X X X X X X X X Extracts X X X X ..... PRASHANT MAHARISHI, ACCOUNTANT MEMBER Appellant by : Sh. Naman Desai, CA Respondent by : Sh. M. Baranwal, Sr. DR ORDER Assesee has filed the present appeal against the impugned order dated 24.05.2017 passed by the Ld. CIT(A)-35, New Delhi relating to assessment year 2014-15 on the following grounds:- 1(a) Ld. DCIT as well as Ld. CIT (Appeal) have grossly erred in disallowing employees contribution to ESI and PF ₹ 14,50,188/- deposited beyond due date prescribed under relevant Acts but before due date of filing of return. (b) Ld. DCIT and Ld. CIT (A) ought to have appreciated the rational of allowance of employer s contribution even if made beyond due date of filing of return under section 43B as per amendment with effect from 01.04.2004. (c) Ld. DCIT and Ld. CIT(A) ought to have followed the judgement of M/s ALOM Extrusions Limited (SC) as well as Hon ble High Courts in case of M/s Ghatge Patil Transports Limited, M/s Hemla Embroidery Mills Private Limited, M/s Bihar State Warehousing Corporation Limited and M/s Sagun Foundry Private Limited on the same subject which are binding on the department. 2. Appellant therefore pleads that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore your honour. Only issue taken up in this Appeal is disallowance of Employee s Contribution to PF and ESI amounting ₹ 14,50,188/- u/s 36(1 )(va) of the Income Tax Act, 1961 on ground of delayed payment over the prescribed date of payment under the relevant Acts. Statement showing details of the relevant delayed payments vis-a-vis prescribed date is as per Annexure - A for ready reference. Our submissions made heieunder may kindly be considered by your honour while disposing of the appeal. 1.01 From perusal of the attached statement your honour would observe that there is a minor delay in the following payments disallowed u/s 36(1)(va): Relevant Act Due Date Paid Date Amount No of Days of Delay ESIC 21/06/2013 22/06/2013 2,347 1 ESIC 21/07/2013 23/07/2013 3,292 2 ESIC 21/07/2013 23/07/2013 2,466 2 ESIC 21/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which reads as under: any sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set up under the provisions of the Employees' State Insurance Act, 1948 (34 of 1948 ), or any other fund for the welfare of such employees. Above sub-clause was added as a deemed income to check the tendencies ol delinquent assesses of not depositing the amount collected as Employee contribution with the relevant authorities and thereby pocketing employee s fund. Hence, law as per the above provision assumes collection ol Employee s contribution to PF and ESI as a deemed income. 2.02 Post collection of such contribution, where the assesse makes a deposit of the amount collected with the appropriate authority and that too within the financial year or before the due date of filing of the income tax return, no such income actually vests with the assesse which can be subjected to tax. In the instant case, all the payments indicated in this para have been deposited with the relevant authorities in the same financial year of the collection of such contribution from employees. Hence, there is no income effectively left with ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trict and literal interpretation of provisions of Section 36(1)(va) oj the 1961 Act read with Explanation 1 and Section 2(24)(x) of the 1961 Act, the assessee will not be entitled for deduction as the employee contribution towards PF received by assessee was deposited late beyond the time stipulated under the relevant statute governing PF. But, it is equally true that the Constitutional Courts viz. Hon'be High Courts and Hon'ble Supreme Court in India have powers to read down the provisions of the 1961 Act to make it workable and to avoid absurdity. On perusal of the decision of Hon'ble Supreme Court in the case of Alom Extrusion (supra), it is observed that Hon'ble Supreme Court has elaborately discussed provisions of Section 36(1 )(va), 2(24)(x) and amendments made by Finance Act, 2003 to Section 43B of the 1961 Act, which amendments to Section 43B of the 1961 Act were held to be retrospective in nature. The Hon'ble Supreme Court also referred in its decision in Alom Extrusion (supra) to its earlier decision in CIT v. J.H. Gotla [1985] 156 ITR 323(SC) , para 10 that intention of the legislature is to be found out from the language used and if strict literal co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds PF/ESI etc within due date as prescribed under relevant statute governing PF/ESI etc, the employers are visited with Interest for delayed deposit of PF/ESI as well Penalties for late deposit beyond the time stipulated under the relevant statute governing PF/ESI and other employees welfare funds. Reference is drawn to Section 7Q and 14 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. Similarly, Hon'ble Madras High Court in the case of Industrial Security and Intelligence India Private Limited (supra) after considering and interpreting the decision of Hon'ble Supreme Court in the case of Alom Extrusion (supra) and Hon'ble Delhi High Court in the case of Aim il Limited (supra) held that deduction is to be allowed for belated payment of employee contribution to PF/ESI which is deposited beyond the due date stipulated under the relevant statutes governing PF/ESI, but the same stood deposited before the due date for filing of return of income as is prescribed u/s 139(1) of the 1961 Act. 4.02 The issue of Employee s contribution to PF has been debated before several High Courts. Majority of the High Courts including the jurisdictional High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,347 21/06/2013 23/07/2013 2,61,901 21/06/2013 22/07/2013 12,015 21/07/2013 23/07/2013 3,292 21/07/2013 23/07/2013 2,466 21/08/2013 23/08/2013 2,63,011 21/08/2013 23/08/2013 12,537 21/08/2013 22/08/2013 2,235 21/09/2013 24/09/2013 2,77,415 21/09/2013 24/09/2013 12,036 21/02/2014 25/02/2014 3,17,706 21/02/2014 25/02/2014 15,439 21/02/2014 25/02/2014 2,260 Total (A) 11,84,660 B) Details of delayed payment on account of EPF: Due Date Paid Date ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
