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2024 (1) TMI 1275 - AT - Income TaxDelayed deposit of employees share of contribution towards ESI/PF - Intimation u/s.143(1) - whether prior to the judgment of the Hon ble Supreme Court in the case of Checkmate Services Pvt. Ltd. 2022 (10) TMI 617 - SUPREME COURT aforesaid claim for deduction could not have been summarily disallowed u/s. 143(1)? - HELD THAT - As prior to the judgment of Checkmate Services Pvt. Ltd. Vs. CIT-1 (supra), the aforesaid claim for deduction could not have been summarily disallowed u/s. 143(1) of the Act. As decided in GURMEET SINGH HORA 2023 (8) TMI 1383 - ITAT RAIPUR as held no such disallowance of the delayed deposit of the employee s share of contribution towards labour welfare fund could have been made in the hands pf the assessee company while processing of its return of income u/s. 143(1)(a) As the facts and issue involved in the present appeal on the first principle, i.e., as to whether or not prior to the judgment of the Hon ble Apex Court in the case of Checkmate Services Pvt. Ltd. 2022 (10) TMI 617 - SUPREME COURT CPC, Bengaluru was well within its right in disallowing the assessee s claim for deduction of delayed deposit of employees share of contributions towards ESI/PF vide an intimation issued u/s. 143(1) of the Act, remains the same, therefore, we follow the same. We, thus, in terms of our aforesaid observations, set-aside the order passed by the CIT(Appeals) wherein he had upheld the order passed by the CPC/A.O u/s. 154 of the Act, and thus, declined the assessee s claim for deduction of delayed deposit of employees share of contribution towards ESI/PF and vacate the addition made by the A.O. Appeal of the assessee company is allowed.
Issues Involved:
1. Legitimacy of the addition of Rs. 24,72,236/- under Section 36(1)(va) of the Income Tax Act. 2. Validity of the disallowance of the deduction for delayed deposit of employees' share of contribution towards ESI/PF by CPC, Bengaluru under Section 143(1) of the Act. 3. Applicability of judicial precedents and the Supreme Court's decision in Checkmate Services Pvt. Ltd. vs. CIT-1. Summary: Issue 1: Legitimacy of the addition of Rs. 24,72,236/- under Section 36(1)(va) of the Income Tax Act The assessee company filed its return for A.Y. 2018-19 declaring an income of Rs. 84,31,610/-. The Centralized Processing Center (CPC), Bengaluru, disallowed the deduction of Rs. 24,72,236/- for delayed deposit of employees' share of contribution towards ESI/PF under Section 36(1)(va) via intimation issued under Section 143(1) of the Act. The assessee's subsequent application under Section 154 was also rejected by the CPC. Issue 2: Validity of the disallowance of the deduction for delayed deposit of employees' share of contribution towards ESI/PF by CPC, Bengaluru under Section 143(1) of the Act The CIT(Appeals) upheld the CPC's decision, citing that the Employees Provident Fund Act, 1952 mandates contributions to be remitted within 15 days from the close of the month in which employees earned their salary. The CIT(A) referenced the Supreme Court's decisions in Checkmate Services (P.) Ltd. v. CIT and Principal Commissioner of Income-tax Vs Strides Arcolab Ltd, which clarified that the provisions of Section 43B do not apply to the determination of the "due date" under Section 36(1)(va). Issue 3: Applicability of judicial precedents and the Supreme Court's decision in Checkmate Services Pvt. Ltd. vs. CIT-1 The Tribunal noted that prior to the Supreme Court's judgment in Checkmate Services Pvt. Ltd. vs. CIT-1, the issue of whether delayed deposits of employees' share of contributions towards ESI/PF could be disallowed under Section 143(1) was debatable. The Tribunal referenced its previous decisions, including Gurmeet Singh Hora Vs. ACIT and Satpal Singh Sandhu Vs. DCIT, which concluded that such disallowances could not be summarily made under Section 143(1) before the Supreme Court's ruling. Conclusion: The Tribunal set aside the CIT(A)'s order and vacated the addition of Rs. 24,72,236/- made by the CPC/A.O under Section 154 of the Act. The appeal of the assessee company was allowed, emphasizing that prior to the Supreme Court's decision in Checkmate Services Pvt. Ltd., the disallowance of delayed deposits of employees' share of contributions towards ESI/PF could not be summarily made under Section 143(1). Order pronounced in open court on 11th day of January, 2024.
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