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TMI Blog2023 (6) TMI 1405X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1961 [hereinafter referred to as "the Act"]. Thereafter, assessee made an application for rectification u/s. 154 on 21.01.2021. CPC issued a rectification order u/s. 154 of the Act on 28.01.2021, wherein an addition of Rs. 32,79,926/- was made u/s. 36(1)(va) of the Act on account of delayed deposit of employees' contribution towards PF & ESI beyond the due date prescribed. 4. Aggrieved by the order passed u/s. 154 of the Act, assessee carried the matter in appeal before the CIT(A), NFAC, who vide order dated 23.12.2021 in appeal No. ITBA/NFAC/S/250/2021-22/1038060999 (1) dismissed the appeal of the assessee. 5. Aggrieved by the order of the CIT(A), the assessee is now in appeal before the Tribunal and has raised following grounds:- 1. The learned CIT(A) has erred in law and on facts of the case in disallowing employees' contribution of PF and ESI, amounting to Rs. 32,79,926/- u/s. 36(1)(va) of the Act, though the appellant had made the payment on or before the dates due for filing Income Tax Return. 2. Alternatively, and without prejudice, the lower authorities have erred in law and on the facts of the case in making a disallowance of payments made within the grace period. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees' contribution to PF and ESI, but the addition could not have been made by the AO in the intimation issued under Section 143(1) of the Act, because the disallowance u/s. 36(1)(va) being a debatable and controversial issue and in view of conflicting decisions, therefore, beyond the scope of adjustment u/s 143(1) of the Act. 9. He further submitted that CIT(A) while confirming the disallowance had relied on the amendment brought in by Finance Act, 2021 w.e.f. 01.04.2021. He submitted that the amendments made by Finance Act are prospective in nature and therefore applicable only w.e.f. 01.04.2021. In support of his aforesaid contention, he placed reliance on following decisions:- a) Kanthi Agency Networks Vs. ADIT - (2022) 194 ITD 581 (Bangalore.); b) Punjab Bevel Gears Ltd Vs. DCIT- (2022) 188 taxmann.com 299 (Delhi); c) Rakesh Janghu Vs. CPC - (2022) 136 taxmann.com 154 (Delhi Tribunal); d) Vyona Logistics (P) Ltd. Vs. ITO - (2022) 139 taxmann.com 302 (Jaipur); e) Paramjeet Singh Vs. DCIT - (2022) 138 taxmann.com 147 (Chandigarh Tribunal) 10. He thereafter submitted that CPC had made the adjustment by taking recourse to Section 143(1)(iv) of the Act which provides for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .11.2022 has observed as under: "3. We have heard .......... It is undisputed that the audit report filed by the assessee indicated the due dates of payment to the relevant funds under the respective Acts relating to employee's share and the said amounts were deposited by the assessee beyond such due dates but before the filing of the return u/s 139(1) of the Act. The case of the assessee before the authorities below has been that such payments before the due date as per section 139(1) of the Act amounts to sufficient compliance of the provisions in terms of section 43B of the Act, not calling for any disallowance. Per contra, the Department has set up a case that the disallowance is called for because of the per se late deposit of the employees' share beyond the due date under the respective Act and section 43B is of no assistance. 4. Before proceeding further, it would be apposite to take note of the relevant statutory provision in this regard. Section 2(24) provides that `income' includes: `(x) any sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set up under the provisions of the Employees' State I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return.' The main provision of section 43B, providing for the deduction only on actual payment basis, has been relaxed by the proviso so as to enable the deduction even if the payment is made before the due date of furnishing the return u/s 139(1) of the Act for that year. The claim of the assessee is that the deduction becomes available in the light of section 36(1)(va) read with section 43B on depositing the employees' share in the relevant funds before the due date u/s 139(1) of the Act. This position was earlier accepted by some of the Hon'ble High Courts holding that the deduction is allowed even if the assessee deposits the employees' share in the relevant funds before the date of filing of return u/s. 139(1) of the Act. This was on the analogy of treating the employee's share as having the same character as that of the employer's share, becoming deductible u/s 36(1)(iv) read in the hue of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, we are extracting the relevant provision as under: '143. (1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely:- (a) the total income or loss shall be computed after making the following adjustments, namely:- (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (iv) disallowance of expenditure or increase in income indicated in the audit report but not taken into account in computing the total income in the return' 8. Sub-section (1) of section 143 states that a return shall be processed to compute total income by making six types of `adjustments' as set out in sub-clauses (i) to (vi). As noted supra, we are concerned only with the examination of two sub-clauses, viz., (ii) and (iv). Subclause (ii) talks of 'an incorrect claim, if such incorrect claim is apparent from any information in the return". The expression "an incorrect claim apparent from any information in the return" has not been generally used in the provision. Rather, it has been specifically defined in Explanation (a) to section 143(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure indicated in the audit report not taken into account in computing the total income in the return'. Point 20(b) of the audit report in Form 3CA has columns - Serial number; Nature of fund; Sum received from employees; Due date for payment; The actual amount paid; and The actual date of payment to the concerned authorities. A copy of audit report in one of the cases under consideration, namely, S.M. Auto Stamping Pvt. Ltd. (ITA No. 521/PUN/2022) has been placed on record. Point 20(b) of the audit report gives the `Sum received from employees' at Rs. 21,800/-. `Due date for payment' has been reported as 15-07-2017 and `The actual date of payment to the concerned authorities' has been given as 20-07-2017. Similar is the position regarding other items disallowed u/s. 36(1)(va) having `The actual date of payment' after the `Due date for payment'. Thus, it is manifest that the audit report clearly points out that as against the due date of payment of the employees' share in the relevant fund on 15.7.2017 for deduction u/s 36(1)(va), the actual payment is delayed and deposited on 20.7.2017. The legislature, for the disallowance under sub-clause (iv) of section 143(1)(a), has use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpression `or increase in income' inserted by the Finance Act, 2021 would be rendered a redundant piece of legislation. It is trite interpretation has to be given to the statutory provisions in such a manner that no part of the Act is rendered nugatory. Distinction in the scope of the two aspects can be understood with the help of the present context only. We have noted that point No. 20(b) of the audit report, dealing with section 36(1)(va), has columns, inter alia, (i) `Sum received from employees'; (ii) `Due date for payment'; and (iii) `The actual date of payment to the concerned authorities'. The column (i) having details of the amounts received from employees indicates about the `increase in income' as per sub-clause (iv) of section 143(1)(a) if the assessee does not take this sum in computing total income. The columns (ii) and (iii) having details of due date for payment and the actual date of payment indicate about `disallowance of expenditure' if the assessee does not make suo motu disallowance in computing total income. Right now, there is no case of `increase in income' because the AO did not make adjustment for non-offering of income of the `Sums received from employees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time of payment, making the due date of payment into relevant fund as on or before 15th December and not 15th November. 14. There is no merit in the contention of linking the date of deposit of the employees' share in the relevant funds with the date of payment of wages. Section 5 of the Payment of Wages Act simply deals with the 'Time of payment of wages'. It does not stipulate any time limit for deposit of the employees share in the relevant funds. For that purpose, the relevant Acts give a window for depositing the contribution within 15 days of the last month's salary. Thus, contribution to the relevant fund towards the salary for the month of October-ending should be deposited before 15th November. 15. In view of the foregoing discussion, we are satisfied that the ld. CIT(A) was justified in sustaining the adjustment u/s 143(1)(a) by means of disallowance made in these cases for late deposit of employees' share to the relevant funds beyond the date prescribed under the respective Acts. 16. Both the sides are agreeable that the facts and circumstances of all the appeals except the two, which will be taken up hereinafter, are similar. We, ergo, countenance the disa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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