9911796707
TMI Blog2022 (12) TMI 1214X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant hereby prays that the disallowance of Rs. 14,83,912/- may please be deleted. 2. On the facts and in the circumstances of the case and in law, , the learned Commissioner of Income Tax (Appeals) has erred in confirming the addition made by the learned assessing officer of Rs. 14,83,912/- under the head Profit and Gains from Business or Profession without appreciating the fact that the explanation 2 to the section 36(1 )(va) of the Act was inserted by Finance Act, 2021 w.e.f 01/04/2021 and hence not applicable to the Assessment year 2017- 18. The appellant hereby prays that the disallowance of Rs. 14,83,912/- may please be deleted. 3. The appellant hereby reserves the right to add, alter, amend or delete any ground/s of appeal." 2. Admittedly, this appeal is time-barred by 27days. By virtue of judgment of the Hon'ble Supreme Court in Cognizance for Extension of Limitation, In re 438 ITR 296 (SC) read with judgment in Cognizance for Extension of Limitation, In re 432 ITRM206 (SC) dated 08-03-2021 and 421 ITR 314, the said delay filing the appeal is condoned and the appeal is admitted for disposal on merits 3. The only issue involved in this appeal is the disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them towards employees' contribution in terms of EPF Act, EPF Scheme, ESI Act, ESI Regulations or any other provident fund or superannuation funds. In the year under consideration, the A.O has ruled that the appellant-assessee has belatedly deposited the employees' contribution towards the EPF and ESI considering the due date under the relevant Acts and Regulations. Secondly, the A.O ruled by virtue of section 30(1)(va) read with section 2(24)(x) of the Act that such amounts received by the appellant-assessee constitute "income". Those amounts could not have been allowed as deduction u/s 36(1)(va) of the Act when the payment was made beyond the relevant due date under the respective Statutes. In other words, as per the A.O as such amounts were paid beyond the due date as prescribed under the respective Acts the right to claim such amounts as allowable deduction while computing the income was lost for ever. The assessee's plea was unsuccessful before the I.T.A.T. and ultimately the Hon'ble Gujarat High Court also rejected the plea of the assessee. As noticed earlier, on this issue since there was a division of opinion amongst various Hon'ble High Courts, therefore, Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on etc were treated as income in the hands of the employer. The significance of this provision is that on the one hand it brought into the fold of "income" amounts that were receipts or deductions from employees income; at the time, payment within the prescribed time - by way of contribution of the employees' share to their credit with the relevant fund is to be treated as deduction (Section 36(1)(va)).The other important feature is that this distinction between the employers "contribution (Section 36(1)(iv)) and employees' contribution required to be deposited by the employer (Section 36(1)(va)) was maintained - and continues to be maintained. On the other hand, Section 43B covers all deductions that are permissible as expenditures, or out-goings forming part of the assessee's liability. These include liabilities such as tax liability, cess duties etc. or interest liability having regard to the terms of the contract. Thus, timely payment of these alone entitle an assessee to the benefit of deduction from the total income. The essential objective of Section 43B is to ensure that if assessees are following the mercantile method of accounting, nevertheless, the deduction of such liab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensuring that they are paid within the due date specified in the particular law. They have to be deposited in terms of such welfare enactments. It is upon deposit, in terms of those enactments and on or before the due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated as a deduction. Thus, it is an essential condition for the deduction that such amounts are deposited on or before the due date. If such interpretation were to be adopted, the non-obstante clause under Section 43B or anything contained in that provision would not absolve the assessee from its liability to deposit the employee's contribution on or before the due date as a condition for deduction. 55. In the light of the above reasoning, this court is of the opinion that there is no infirmity in the approach of the impugned judgment. The decisions of the other High Courts, holding to the contrary, do not lay down the correct law. For these reasons, this court does not find any reason to interfere with the impugned judgment. The appeals are accordingly dismissed." 5. In the aforesaid judgment, the Hon'ble Supreme Court has analysed the legal essence ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
