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2023 (6) TMI 1405 - AT - Income TaxAddition u/s. 36(1)(va) - delayed deposit of employees contribution towards PF ESI - intimation passed u/s 143(1) - HELD THAT - We find that Hon ble Supreme Court in the case of Checkmate Services Pvt. Ltd. 2022 (10) TMI 617 - SUPREME COURT has held that the contribution by the employees to the relevant funds is the employer s income u/s 2(24)(x) of the Act and the deduction for the same can be allowed only if such amount is deposited in the employee s account in the relevant fund before the date stipulated under the respective Acts. Thus the deduction u/s 36(1)(va) of the Act can be allowed only if the employees share in the relevant funds is deposited by the employer before the due date stipulated in respective Acts. We find that identical issue of disallowance of delayed deposit of PF/ESI dues in the intimation issued u/s 143(1) of the Act arose before the Pune Bench of Tribunal in the case of Cemetile Industries 2022 (12) TMI 354 - ITAT PUNE - Appeal of the assessee is dismissed.
Issues Involved:
1. Disallowance of employees' contribution to PF and ESI under Section 36(1)(va) of the Income-tax Act. 2. Applicability of Section 143(1) for making adjustments related to delayed deposits. 3. Prospective nature of amendments brought by Finance Act, 2021. 4. Condonation of delay in filing the appeal. 5. Charging of interest under Section 234A/B/C/D of the Income-tax Act. 6. Principles of Natural Justice and appreciation of facts by lower authorities. Issue-wise Detailed Analysis: 1. Disallowance of Employees' Contribution to PF and ESI under Section 36(1)(va) of the Income-tax Act: The central dispute in the appeal was the disallowance of Rs. 32,79,926/- made under Section 36(1)(va) due to delayed deposit of employees' contribution towards PF and ESI. The assessee argued that the payments were made before the filing of the Income Tax Return, and thus, no disallowance should be made. The Tribunal referred to the Supreme Court's decision in Checkmate Services Pvt. Ltd. which held that the deduction under Section 36(1)(va) is allowed only if the employees' share is deposited before the due date stipulated in the respective Acts. 2. Applicability of Section 143(1) for Making Adjustments Related to Delayed Deposits: The Tribunal examined whether the adjustment for delayed deposits could be made under Section 143(1). It was argued by the assessee that such disallowance is debatable and should not be adjusted under Section 143(1). The Tribunal referred to the Pune Bench's decision in Cemetile Industries, which upheld the adjustment under Section 143(1), stating that the audit report indicated the due dates and actual dates of payment, thus falling within the scope of adjustments permissible under Section 143(1)(a)(iv). 3. Prospective Nature of Amendments Brought by Finance Act, 2021: The assessee contended that the amendments made by the Finance Act, 2021, which clarified the disallowance of delayed deposits, are prospective and not applicable to the assessment year in question. The Tribunal, however, relied on the Supreme Court's ruling, which clarified that the law is declaratory and applies retrospectively unless specified otherwise. 4. Condonation of Delay in Filing the Appeal: The appeal was initially noted as time-barred by 137 days. The assessee filed a condonation application, explaining the delay. The Tribunal, considering the affidavit and the reasons provided, found no mala fide intention and condoned the delay, admitting the appeal for hearing. 5. Charging of Interest under Section 234A/B/C/D of the Income-tax Act: The assessee challenged the charging of interest under Sections 234A/B/C/D. However, the Tribunal did not find any specific arguments or evidence to overturn the lower authorities' decision on this matter, and thus, this ground was dismissed. 6. Principles of Natural Justice and Appreciation of Facts by Lower Authorities: The assessee claimed that the lower authorities did not properly appreciate the facts and violated the principles of natural justice. The Tribunal, after reviewing the submissions and the detailed order of the CIT(A), found no breach of law or principles of natural justice and upheld the order of the CIT(A). Conclusion: The Tribunal dismissed the appeal, upholding the disallowance of Rs. 32,79,926/- under Section 36(1)(va) for delayed deposit of employees' contribution towards PF and ESI. The Tribunal also confirmed that such adjustments could be made under Section 143(1), following the precedents set by the Supreme Court and the Pune Bench of the Tribunal. The appeal was dismissed in entirety, including the grounds related to the charging of interest and alleged procedural lapses by the lower authorities.
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