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TMI Blog2023 (6) TMI 1414X X X X Extracts X X X X X X X X Extracts X X X X ..... the cases the delay is of few days and the deposit has been made before the due date of filing the return of Income. So the addition of Rs. 44,03,794/- is liable to be quashed. 2. On the facts and in the circumstances of the case and also in law, the CIT(Appeals), NFAC, Delhi ignoring the facts in which confirmed the addition of Rs. 5,14,395/-u/s 43(B) of the IT Act for delayed deposit of EPF, ESIC Service Tax. The amount of EPF of Rs. 4,59,799/- ESIC of Rs 9,034/ was deposited the within stipulated time and rest of Rs 45,562/- of Service Tax Payable was deposited in the FY 2017-18. This amount of Service Tax Payable was never a part Profit & Loss account and as such this section u/s 43(B) is not applicable on the s amount. So the addition of Rs 5,14,395/-is liable to be quashed." I.T.A. No. 2982/DEL/2022 (A.Y. 2018-19) 1. On the facts and in the circumstances of the case and also in law, the Ld. Rs. CIT(Appeals), NFAC, Delhi ignoring the facts in which confirmed the addition of Rs. 37,69,476/- u/s 43(B) of the IT Act for delayed deposit of GST payable amount on services for the FY 2017-2018 basically this amount was paid in the FY 2018-2019 onwards and dismissed the appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the grounds mentioned above. Ground No.1 8. The assessee pleaded in the Ground No.1 that the CIT(A) erred in confirming the addition u/s 36 of the Act for delayed deposit of EPF and ESIC which were paid within stipulated time ignoring the fact that in most of the cases delay is of few days and the deposit has been made before the due date of filing of the return of income. Thus, the addition of Rs.44,03,784/- is liable to be quashed. 9. The Ld. DR submitted that the issue regarding belated deposit of EPF & ESIC has been settled by the Hon'ble Supreme Court of India in the case of Checkmate Services Pvt. Ltd. vs. CIT-1 in Civil Appeal No. 2833 of 2016, vide order dated 12/10/2022, therefore, submitted that the Ground No. 1 of the Assessee deserves to be dismissed. 10. We have heard the Ld. DR and perused the material on record. The issue involved in Ground No. 1 regarding delayed deposit of amount collected towards employees' contribution but the same is paid before the due date of filing of return. The Hon'ble Supreme Court in the case of Checkmate Services Pvt. Ltd. vs. CIT-1 in Civil Appeal No. 2833 of 2016, vide order dated 12/10/2022 held that delayed deposit of the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction 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 assessees' 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 assessee are following the mercantile method of accounting, nevertheless, the deduction of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct 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 amounts are deposited on or before the due date. If such 34 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." 11. Thus, following the ratio laid down by the Hon'ble Supreme Court in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is that the 'CIT(A) ignored the fact in confirming addition of Rs.37,69,476/- u/s 43(B) of the Act for delayed deposit of GST payable amount on service for the Assessment Year 2017-18 basically the said amount was paid in the Financial Year 2018-19 onwards and dismiss the Appeal. Further, the said amount was never a part of P & L account and declared in Assessee's audit report in Point No. 26 (i)B(b) of Chartered Accountant and such the Section 43(B) is not applicable. Therefore, order u/s 250 and the intimation under 143(1) is liable to be quashed.' 17. The Ld. DR vehemently argued that the Ground No. 1 urged by the assessee is devoid of merit which has been already considered and adjudicated by the CIT(A). Therefore, the same is liable to be dismissed. 18. We have heard the Ld. DR and perused the material available on record and gave our thoughtful consideration. It is the specific case of the assessee that the amount of Rs. 37,69,476/- has been added u/s 43(B) of the Act was never a part of profit and loss account and the same has been declared in audit report Point No. 26(i)B(b) of the Chartered Accountant and such as Section 43(B) is not applicable. Considering the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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