TMI Blog2023 (2) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;ble Supreme Court in CHECKMATE SERVICES P. LTD. VERSUS COMMISSIONER OF INCOME TAX-1 [ 2022 (10) TMI 617 - SUPREME COURT] 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 both the appeals of the assessee are dismissed. - I.T.A. No. 718 & 719/PUN/2021 : - - - Dated:- 7-11-2022 - SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER For the Appellant : Shri V.L. Jain (through virtual) For the Respondent : Shri Ramnath P. Murkunde ORDER PER SHRI PARTHA SARATHI CHAUDHURY, JM These appeals preferred by the assessee emanates from the respective orders of the (NFAC), Delhi, dated 28-07-2021 for A.Y. 2018-19 and dated 26-07-2021 for A.Y. 2019-20 as per the following grounds of appeal. ITA No. 718 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of filing the return of income under the provisions of section 139(1) of the Act, in such case, the A.O was directed to delete additions made under section 36(1)(va) of the Act from the hands of the assessee. Pune Tribunal have passed orders in favour of the assessees relying on Hon'ble Jurisdictional High Court in the case of CIT Vs. Ghatge Patil Transports Ltd. 368 ITR 769 (Bom) which followed the decision of Hon'ble Himachal Pradesh High Court in the case of CIT Vs. Nipso Polyfabrics Ltd. (2013) 350 ITR 327 (HP). In the legal jurisprudence interpreting the provisions of sec. 30(1)(va) and section 43B of the Act, there has been a division of opinion 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or in fact the other provisions of the Act. 52. When Parliament introduced Section 43B, what was on the statute book, was only employer s contribution (Section 34(1)(iv)). At that point in time, there was no question of employee s contribution being considered as part of the employer s earning. On the application of the original principles of law it could have been treated only as receipts not amounting to income. When Parliament introduced the amendments in 1988-89, inserting Section 36(1)(va) and simultaneously inserting the second proviso of Section 43B, its intention was not to treat the disparate nature of the amounts, similarly. As discussed previously, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employees income and held in trust by the employer. This marked distinction has to be borne while interpreting the obligation of every assessee under Section 43B. 54. In the opinion of this Court, the reasoning in the impugned judgment that the non-obstante clause would not in any manner dilute or override the employer s obligation to deposit the amounts retained by it or deducted by it from the employee s income, unless the condition that it is deposited on or before the due date, is correct and justified. The non-obstante clause has to be understood in the context of the entire provision of Section 43B which is to ensure timely payment before the returns 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 contributio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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. 7. 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. 8. Respectfully following ..... X X X X Extracts X X X X X X X X Extracts X X X X
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