2023 (4) TMI 797 - AT - Income Tax

Employees contribution for the Provident Fund and ESI, which was made after due date of respective Act and paid within due date of filing return u/s 139(1) - HELD THAT - This issue came for consideration before Hon ble Supreme Court in the case of CHECKMATE SERVICES PVT LTD 2022 (10) TMI 617 - SUPREME COURT decided the issue on allowability/treatment of delayed Employee PF Contribution payment in hands of assessee under provisions of Income Tax Act and held that Section 36(1)(va) and Section 43B(b) operate on totally different equilibriums and have different parameters for due dates, i.e., employee's contribution is linked to payment before the due dates specified in the respective Acts and employer's contribution is linked to the payment before the prescribed due date for filing of return u/s. 139(1) of Income Tax Act, 1961. The result of any failure to pay within the prescribed dates also leads to different results. In the case of employee's contribution, any failure to pay within the prescribed due date under the respective PF Act or Scheme will result in negating employer's claim for deduction permanently forever u/s.36(1)(va). On the other hand, delay in payment of employer's contribution is visited with deferment of deduction on payment basis u/s.43B and is therefore not lost totally. Therefore, as per the above decision, the disallowance made by the Revenue authorities, were fully justified. Decided against assessee. Adjustment u/s 143(1) - Since the issue is already disposed of by the Hon ble Supreme Court in the case of Checkmate Services Pvt. Ltd. cited (supra), it has to be followed by the department as well as by this Tribunal. We find no merit in the argument of the assessee s counsel that disallowance of employees contribution to ESI/PF deposited by the assessee after the specified date prescribed under the respective Act was beyond the scope of adjustment u/s 143(1) of the Act - Decided against assessee.

Summary

Issues Involved:
The issues involved in this case are the disallowance of employees' contribution for Provident Fund and ESI made after the due date of the respective Act but paid within the due date of filing return under section 139(1) of the Income-tax Act, 1961. The additional grounds raised by the assessee challenge the jurisdiction of the Assessing Officer in making the disallowance and seek to add, alter, or delete grounds as necessary.

Disallowed Employees' Contribution for Provident Fund and ESI:
The appeals by the assessee challenged the disallowance of employees' contribution for Provident Fund and ESI made after the due date of the respective Act but paid within the due date of filing return under section 139(1) of the Income-tax Act, 1961. The Tribunal considered the decision of the Jaipur Bench in a similar case, which held that such adjustments were beyond the scope of section 143(1) of the Act. The Tribunal admitted the additional grounds raised by the assessee based on this decision. However, the Tribunal ultimately dismissed the main grounds raised by the assessee, citing a Supreme Court judgment that differentiates between employee and employer contributions, leading to the justification of the disallowance made by the Revenue authorities.

Additional Grounds Raised by the Assessee:
The Tribunal addressed the additional grounds raised by the assessee, which argued that the disallowance of employees' contribution to ESI/PF made after the specified date under the respective Act was beyond the scope of adjustment under section 143(1) of the Act. The Tribunal found no merit in the argument, stating that the decision of the Supreme Court in a similar case established the justification for such disallowances. The Tribunal dismissed the additional grounds raised by the assessee, emphasizing that the Tribunal in a related case had not considered the Supreme Court's ruling and therefore provided no basis for a different interpretation.

Conclusion:
In conclusion, the Appellate Tribunal dismissed both appeals of the assessee, upholding the disallowance of employees' contribution for Provident Fund and ESI made after the specified dates under the respective Acts but paid within the due date of filing return under section 139(1) of the Income-tax Act, 1961. The Tribunal's decision was based on the differentiation between employee and employer contributions as established by a Supreme Court judgment, which justified the disallowances made by the Revenue authorities.