TMI Blog2022 (1) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of ₹ 373030.00 made by CPC through adjustment u/s 143(1) on account of late payment of Provident Fund and ESIC u/s 43B of the ACT. 2. Whether the Id CIT(A) was justified in applying ratio of Bharat Hotels Limited case in which Hon Delhi High Court has directed the assessing officer to check the dates of payments as per the order of the Hon Court and decide the quantum of amount of disallowance. 3. Whether the CPC has rights to make the adjustments u/s 143(1) to the total income on debatable issues like issues u/s 43B. 3. At the outset, the only effective ground is regarding sustaining of addition ₹ 3,73,030/- on account of late payment PF/ESIC u/s. 43B of the Income Tax Act, 1961 ( the Act ). 4. The Ld. Counsel for the assessee submitted that the issue is squarely covered in favour of the assessee by the judgment of the Hon ble Delhi High Court rendered in the case of PCIT vs Pro Interactive Service (India) Pvt.Ltd. in ITA No.983/2018 [Del.] order dated 10.09.2018 and in the case of CIT vs AIMIL Ltd. 321 ITR 508 and stated that that these binding precedents have been followed by the various Benches of the Tribunal. 5. Per contra, Ld. Sr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of CIT vs Aimil Ltd and other judicial pronouncements. 6.2 I have carefully considered the order passed u/s 143(1), facts of the case, grounds of appeal and extant provisions of the Act on the issue involved - disallowance u/s 36(1)(va) for late deposit of employee s contribution towards EPF. 6.3 The issue in question is expenses related to deposit by the employer in a fund for the purpose of ESI and EPF. This contribution and deposit of money by the employer in the designated fund is an allowable expenditure, subject to certain conditions laid down by the legislature. There are two limbs of this contribution by the employer: (a) Employer s own contribution (b) Employee s contribution Both are to be deposited by the employer only. On behalf of the employee, the employer deposits the money in the designated fund. The respective Acts have provided due dates for such deposits to be made. The allowability of expense related to employers contribution is governed by Section 43B whereas allowability under the Income tax Act related to employees contribution which is governed by section 36(1 )(va). 6.4 The actual intent of the legislatu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he matters dealt with therein, in computing the income referred to in section 28- (i), (ia)(ib)... (ii)(iia) (iii) (iiia) (iv)(iva) (v) (va) any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the due date. Explanation.-For the purposes of this clause, due date means the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued thereunder or under any standing order, award, contract of service or otherwise;] 6.7 From the above specific provisions, there remains no ambiguity that appellant was entitled to claim deduction u/s 36(1 )(va) only if it has credited the amount of contributions received towards PF ESI from its employees before the due date of the relevant funds, which in this case has not been complied with. Hence, I am of the considered view that appellant was not entitled to claim deduction u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of late deposit of employees contribution towards EPF and ESIC is in consonance under the scope of Section 143(1 )(a) of the Act for which there is specific provision in Sub- Clause (ii) of Clause(a) of Section 143(1) which makes it crystal clear that the total income or loss shall be computed after making certain adjustments, wherein in Sub-clause (ii), it is provided, an incorrect claim, if such incorrect claim is apparent from any information in the return. 6.11 Thus it is evident that while processing the return u/s 143(1), CPC has rightly made adjustments in respect of incorrect claim of deduction u/s 36(1 )(va) of the Act in respect of contributions received from employees by the appellant towards EPF and ESIC, which was not credited to the account of the employees by the due dates provided in the respective Acts. Therefore, I am of the considered view that the adjustment made u/s 143(1) is well within the scope of Section 143(1) as adjustment was in respect of an incorrect claim which finds place under Sub-Clause (ii) of Clause (a) of Section 143(1), mentioned supra, and there is no inconsistency in processing the return and the submissions made by the appellant are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is apparently clear that the assessee would be entitled for deductions qua the sum received from any office employee to which provisions under subsection (x) of clause (24) of section 2 is applied only, if such sum is credited by the assessee to the employees account in the relevant fund or funds on or before the due date. Due date is further defined in the Explanation, which means, the date by which the assessee is required as an employer to credit employees contribution to the employees account in the relevant fund under any Act or rule or order or notification issued thereunder or any standing order or award or service or otherwise. Meaning thereby, in case, employer fails to deposit the entire amount towards employees contribution on account of PF ESI with concerned department on or before the due date under PF ESI, the assessee shall not be entitled for deduction to that extent. 10. Decision of the Hon'ble Supreme Court relied upon by the assessee cited as CIT vs. Atom Extrusions Ltd. (supra) is not applicable to the facts and circumstances^ of the case because Hon ble Supreme Court has decided the issue in Atom Extrusions Ltd. case qua employers contribution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se confirmed the additions - made by the AO based on the entire amounts that were disallowed. The IT AT however granted complete relief. 8. Having regard to the specific provisions of the Employees' Provident Funds Act and ESI Act as well as the concerned notifications which granted a grace period of 5 days (which appears to have been late withdrawn recently on 08.01.2016), we are of the opinion that the ITAT's decision in this case was not correct. The assessee undoubtedly was entitled to claim the benefit and properly treat such amounts as having been duly deposited, which were in fact deposited within the period prescribed (i.e. 15 + 5 days in the case of EPF and 21 days + any other grace, period in terms of the extent notification). As far as the amounts constituting deductions from employees' salaries towards their contributions, which were made beyond such stipulated period, obviously the assessee was not entitled to claim the deduction from its returns. 9. In view of this discussion, the Revenue's appeal is partly allowed. The AO is directed to examine the contributions made with reference to the dates when they were actually made and grant relief ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven a landmark decision observing that the dismissal of a SLP in limine simply implies that the case before this court was not considered worthy of examination for a reason, which may be other than the merits of the case. Reliance in this regard is placed on the decision of Hon ble Apex Court dated 01/03/2019 in civil Appeal No. 2432 of 2019 in the .case Khoday Distilleries Ltd. (Now Known As Khoday India Limited) and others vs Shri Mahadeshwara Sahakara Sakkare Karkhane Ltd. Kollegal (Under Liquidation) Represented by the Liquidator with Civil Appeal No. 2433 of 2019. Thus, the reliance placed on the above judicial pronouncements wherein the SLP of the department was dismissed does not make it a case that subsequent orders of jurisdictional High Court or ITAT cannot be relied upon. 6.14 Taking into consideration the facts of the case and latest judicial precedence available on record, I am of the considered view that the appellant is not entitled for deduction u/s 36(1 )(va) in respect of delayed payment of employee s contribution towards EPF and ESIC before the due date of filing of ITR. The appellant is keeping Govt, money in his possession which is against the spirit of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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