TMI Blog2022 (12) TMI 1308X X X X Extracts X X X X X X X X Extracts X X X X ..... .T.A. No. 98/PUN/2022 - - - Dated:- 21-11-2022 - SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER Appellant by : None Respondent by : Shri Ramnath P. Murkunde ORDER PER BENCH This appeal preferred by the assessee emanates from the order of the National Faceless Appeal Centre (NFAC), Delhi, dated 13-11-20221 for A.Y. 2017-18 as per the following grounds of appeal. 1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in disallowing the claim in respect of belated remittance of employees provident fund contribution of Rs. 4,74,788/-. After the omission of the second proviso to section m43B w.e.f. 01-04-2004, the deduction is allowable under the first provision, if the payment is made on or before the due date for furnishing the return of income. 2. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in disallowing the claim in respect of belated remittance of Employees provident fund based on the in section to explanation of seciton36 of the Income-tax Act, 1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the issue where the Hon'ble High Courts of Bombay, Himachal Pradesh, Calcutta, Gauhati and Delhi have interpreted the provisions beneficial to the assessee while the Hon'ble High Courts of Kerala and Gujarat have interpreted the provisions in favour of the Revenue. These difference of views were noticed by the Hon'ble Supreme Court because of which it had allowed Special Leave to Appeal in a group of matters taking the lead case in the matter of Checkmate Services P. Ltd. Vs. CIT-1 (Civil Appeal No. 2833 of 2016 and others). In all these appeals, the common question involved is with respect to the interpretation of section 36(1)(va) and section 43B of the Act and whether the appellant-assessees were entitled to deduction of amounts deposited by 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ously, the memorandum introducing the Finance Bill clearly stated that the provisions especially second proviso to Section 43B - was introduced to ensure timely payments were made by the employer to the concerned fund (EPF, ESI, etc.) and avoid the mischief of employers retaining amounts for long periods. That Parliament intended to retain the separate character of these two amounts, is evident from the use of different language. Section 2(24)(x) too, deems amount received from the employees (whether the amount is received from the employee or by way of deduction authorized by the statute) as income - it is the character of the amount that is important, i.e., not income earned. Thus, amounts retain by the employer from out of the employee s income by way of deduction 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interest payment and other statutory liability. In the case of these liabilities, what constitutes the due date is defined by the statute. Nevertheless, the assessees are given some leeway in that as long as deposits are made beyond the due date, but before the date of filing the return, the deduction is allowed. That, however, cannot apply in the case of amounts which are held in trust, as it is in the case of employees contributions- which are deducted from their income. They are not part of the assessee employer s income, nor are they heads of deduction per se in the form of statutory pay out. They are others income, monies, only deemed to be income, with the object of 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 amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f, 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. 6. 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) of the Act but beyond the due date as provided in the respective Statutes. 7. 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 appeal of the assessee is dismissed. 8. In the result, appeal filed by the assessee stands dismissed. Order pronounced in the op ..... 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