TMI Blog2023 (3) TMI 855X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under the respective Acts. Contrary binding decision on the issue nor has placed on record to demonstrate that the order of Pune Bench of Tribunal in the case of Cemetile Industries (supra) has been set aside, stayed or overruled by higher judicial forum. Decided against assessee. - ITA No. 1242/Del/2022 - - - Dated:- 16-3-2023 - Sh. Anil Chaturvedi, Accountant Member And Sh. Narender Kumar Choudhry, Judicial Member For the Assessee : Shri Kamal Bansal, C.A. For the Revenue : Shri Arvind Bansal, Sr. D.R. ORDER PER ANIL CHATURVEDI, AM: This appeal filed by the assessee is directed against the order dated 13.08.2021 passed by the Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi relating to Assessment Year 2019-20. 2. Brief facts of the case as culled out from the material on record are as under :- 3. Assessee is a financial institution stated to be engaged in the business of providing long term finance for construction or purchase of houses in India for residential purposes. Assessee filed its original return of income on 31.10.2019 for A.Y. 2019-20 declaring total income of Rs.11,42,86,93,010/-. In the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not justified in upholding the action of AO whereby the adjustment of Rs.16,99,358/- was made on account of delayed deposit of employees share of Provident Fund ESI dues as the same was deposited before the due date of filing of the return of income u/s 139(1) of the Act. He further submitted that CIT(A) was not justified in making the addition as the aforesaid addition does not fall within the purview of Section 143(1) as it is a debatable issue. He further submitted that there is no application of mind by CIT(A) in disposing of the ground taken by assessee. 6. Learned DR on the other hand supported the order of lower authorities and further submitted that the issue of delayed payment has now been settled by Hon ble Supreme Court in the case of Checkmate Services Pvt. Ltd. and others vs. CIT others (2022) 448 ITR 518 (SC). 7. We have heard the rival submissions and perused the material available on record. The issue in the present ground is with respect to the disallowance of delayed deposit of employee s contribution of PF ESI in the intimation passed u/s 143(1) of the Act. We find that Hon ble Supreme Court in the case of Checkmate Services Pvt. Ltd. (supra) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yer-assessee, then section 36(1)(va) comes into play for providing the deduction. This provision provides that: `(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. . The term `due date for the purposes of this clause has been defined in Explanation 1 to this provision to mean: `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. Thus, it is axiomatic that deposit of the employees share of the relevant funds before the due date under the respective Acts is sine qua non for claiming the deduction. Au Contraire, if the contribution of the employees to the relevant funds is not deposited by the employer before the due date under the respective etc., then the deduction u/s.36(1)(va) is lost notwithstanding the fact that the share of the employees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the contribution by the employees to the relevant funds is the employer s income u/s.2(24)(x), but the deduction for the same can be allowed only if such amount is deposited in the employee s account in the relevant fund before the date stipulated under the respective Acts. The hitherto view taken by some of the Hon ble High Courts in allowing deduction even where the amount was deposited in the employee s account before the time allowed u/s.139(1), ergo, got overturned. The net effect of this Apex Court judgment is that the deduction u/s.36(1)(va) can be allowed only if the employees share in the relevant funds is deposited by the employer before the due date stipulated in respective Acts and further that the due date u/s.139(1) of the Act is alien for this purpose. 6. There is no quarrel that the enunciation of law by the Hon ble Supreme Court is always declaratory having the effect and application ab initio, being, the date of insertion of the provision, unless a judgment is categorically made prospectively applicable. The ld. AR candidly admitted that this judgment will equally apply to the disallowance u/s.36(1)(va) anent to all earlier years as well for the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h return; (ii) in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or (iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction; 9. Clause (i) of Explanation (a) refers to a situation in which there is a claim of income or expenditure at two places in the return of income and there is inconsistency in them. For example, if deduction is claimed under a specific section for a sum of Rs.100/- in the Profit and loss account accompanying the return, but in the computation of income, the amount has been taken as Rs.110/-, leading to inconsistency, requiring an adjustment. Clause (ii) of Explanation (a) covers a situation in which claim is made, say, for a deduction u/s.80IA for which audit report is required to be furnished, but such report has not been furnished along with the return. Clause (iii) contemplates a situation in which deduction exceeds specified statutory limit. For example, section 24(a) provides for a standard deduction for a sum equal to 30% of the annual value, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance, the case gets covered within the purview of the provision warranting the disallowance. However, the indication must be clear and not vague. If the indication in the audit report gives a clear picture of the violation of a provision, there can be no escape from disallowance. Turning to the facts of the case, it is clear from the mandate of section 36(1)(va) that the employees share in the relevant funds must be deposited before the due date under the respective Acts. If the audit report mentions the due date of payment and also the actual date of payment with specific reference in column no. 20(b) having heading: `Details of contributions received from employees for various funds as referred to in section 36(1)(va) , it is an apparent indication of the disallowance of expenditure u/s 36(1)(va) in the audit report in a case where the actual date of payment is beyond the due date. Though the audit report clearly indicated that there was a delay in the deposit of the employees share in the relevant funds, which was in contravention of the prescription of u/s.36(1)(va), the assessee chose not to offer the disallowance in computing the total income in the return, which r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of `disallowance of expenditure and not `increase of income . Further, the entire challenge by the assessee throughout has been to the disallowance of expenditure made by the AO. It set up a case before the authorities below, including the ld. CIT(A), taking shelter of section 43B of the Act by arguing that the disallowance cannot be made because such payment was made before the due date u/s.139(1) of the Act. As such, the contention of adjustment u/s 143(1)(a)(iv) due to `increase in income is jettisoned. 12. Another argument point was put forth on behalf of the assessee that the assessee did not claim any deduction in the Profit and loss account of the amount under consideration and hence no disallowance should have been made. This argument is again bereft of force. The assessee claimed deduction for salary on gross basis, inclusive of the employees share to the relevant funds. To put it simply, if gross salary is of Rs.100, out of which a sum of Rs.10 has been deducted as contribution to relevant fund, then the debit of Rs.100 in the Profit and loss account means deduction has been claimed for Rs.10 as well. Ex consequenti, if deduction of Rs.10 is not allowed u/s 36(1)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e audit report for the financial year 2016-17, which refers to due date of payment as 15-05-2015 and the actual date of payment as 12-05-2016. This shows that inadvertently the auditor recorded due dates for payment as pertaining to the preceding year and actual date of payment for the current year for the purposes of indicating the disallowance of expenditure u/s.36(1)(va). The AO is directed to verify this fact and make the disallowance u/s.36(1)(va), if warranted, as per the correct figures. 18. The second case is Exfo Electro Optical Engineering (I) Pvt. Ltd., (ITA No.523/PUN/2022). The ld. AR contended that the auditor inadvertently mentioned the amount of employees share as well as the employer s share in point 20(b) of the audit report. The AO is directed to verify the factual position in this regard and make disallowance only in respect of employees share. 19. In the result, the appeals in ITA No.523/PUN/2022 and ITA No.702/PUN/2022 are allowed for statistical purposes and all other appeals are dismissed. 8. Before us, Learned AR has not pointed to any contrary binding decision on the issue nor has placed on record to demonstrate that the order of Pune Benc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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