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2024 (4) TMI 53 - AT - Income TaxAllowability of Employee s Contribution - Adjustment u/s 143 - late deposit of employee welfare fund by misunderstanding actual legal position - assessee had filed a rectification application before the AO i.e. ACIT(CPC) which was rejected as disallowance made by AO on the ground that employee s contribution towards ESI/PF was not made within due date and admitted in the Audit Report, cannot be said to be a mistake apparent from the record HELD THAT - The Hon ble Supreme Court in the case of Checkmate Services Pvt. Ltd 2022 (10) TMI 617 - SUPREME COURT as held that the non-obstante clause has to be understood in the context of the entire provision of Section 43B which is to ensure timely payment before the returns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interest payment and other statutory liability. In the case of these liabilities, what constitutes the due date is defined by the statute. Once Hon ble Supreme Court has laid down a law as per Article 141 of the Constitution of India, it is law of the land. Therefore, the law declared by the Hon ble Supreme Court is applicable from the inception of the relevant provision. As decided in N. Kuppanna Gounder 1974 (8) TMI 96 - MADRAS HIGH COURT that when a law is declared it has effect not only from the date of the decision but also from the inception of the statutory provision. Thus, the law declared by Hon ble Supreme Court on the issue of allowability of Employee s Contribution is applicable from the date of the inception of the relevant section 36(1). Appeal of the assessee is dismissed.
Issues involved:
The appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeal) for A.Y. 2018-19 u/s 250 of the Income Tax Act, 1961, emanating from an order u/s 154 of the Act passed by Asst. Commissioner of Income Tax(CPC). Issue 1: Adjustment under section 143(1) The ACIT(CPC) disallowed Rs. 1,48,006/-, the employee's share of contribution towards ESI/PF, as it was paid beyond the due dates prescribed under the relevant statutes. The assessee filed a rectification application which was rejected, and the disallowance was upheld. Issue 1 Details: The rectification application was rejected as the disallowance was not a mistake apparent from the record. The ACIT(CPC) correctly rejected the rectification application as the contribution was made beyond the due date specified in the respective statute, as admitted by the assessee in the audit report. Issue 2: Confirmation of disallowance The ld.CIT(A) confirmed the disallowance following the decision of the Hon'ble Supreme Court in the case of Checkmate Services Pvt. Ltd., Vs. CIT. Issue 2 Details: The disallowance made by the ACIT(CPC) on the ground of late payment of employee's contribution towards ESI/PF was confirmed by the ld.CIT(A) based on the decision of the Hon'ble Supreme Court, which emphasized the importance of timely payment of such contributions. Issue 3: Applicability of Supreme Court decision The law declared by the Hon'ble Supreme Court on the issue of the allowability of Employee's Contribution is held to be applicable from the inception of the relevant provision. The appeal of the assessee was dismissed based on this interpretation. Issue 3 Details: The Hon'ble Supreme Court decision on the timely deposit of employee contributions is considered applicable from the inception of the relevant provision. Citing Article 141 of the Constitution of India, the law declared by the Supreme Court is deemed the law of the land, leading to the dismissal of the assessee's appeal. In conclusion, the appeal of the assessee was dismissed based on the disallowance of the employee's share of contribution towards ESI/PF, which was paid beyond the due dates specified under the relevant statutes. The decision was upheld by the ld.CIT(A) and based on the interpretation of the Hon'ble Supreme Court decision, the appeal was ultimately dismissed.
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