2023 (4) TMI 116 - HC - Income Tax

Delayed payment of employee s contribution to PF/ESI - addition u/s 36(1)(va) r.w.s. 43B - HELD THAT - In view of the law emerging from the decision of the Supreme Court in Checkmate Services (P) Ltd. 2022 (10) TMI 617 - SUPREME COURT the contentions and the questions raised by the appellant could be said to be no longer res integra. The law as holding the field operates against the appellant.

Summary

Issues Involved:
The issues involved in this case are the interpretation of provisions related to employee's contribution to PF/ESI under Section 36(1)(va) and Section 43B of the Income Tax Act, 1961, and the retrospective applicability of amendments made by the Finance Act, 2021.

Interpretation of Provisions Related to Employee's Contribution:
The appellant, a firm engaged in providing manpower, filed an appeal regarding the delayed deposit of employees' contribution to PF and ESI. The Assessing Officer added the delayed contribution amount to the appellant's income, leading to a dispute. The appellant argued that once the contribution amount was paid, it should not be treated as income since it was not retained for the appellant's benefit. On the other hand, the department contended that deductions should only be allowed if the contribution is paid within the prescribed rates. The Supreme Court's decision in Checkmate Services (P) Ltd. v. Commissioner of Income Tax clarified the distinction between employer's and employee's contributions, emphasizing that employee's contributions are deemed income and must be deposited before the due date for deduction.

Retrospective Applicability of Amendments:
The appellant raised a question regarding the retrospective applicability of amendments made by the Finance Act, 2021, to Section 36(1)(va) and Section 43B of the Income Tax Act. The appellant argued that the Tribunal erred in holding that the amendments were applicable retrospectively. However, the Supreme Court's decision highlighted the separate treatment of employer's and employee's contributions, indicating that the law operates against the appellant's contentions.

Conclusion:
Based on the Supreme Court's ruling and the interpretation of the relevant provisions, it was determined that no substantial question of law arose for consideration in the appeal. Consequently, the appeal was dismissed summarily.