2023 (4) TMI 288 - AT - Income Tax

Belated remittance of employee s contribution towards PF ESI - HELD THAT - We find that the issue is squarely covered in favour of the revenue by the decision of Hon ble Supreme Court in the case of Checkmate Services P Ltd 2022 (10) TMI 617 - SUPREME COURT Adjustments' u/s 143(1)(a)(ii) - Since, the deduction claimed by the assessee towards belated remittance of PF ESI is contrary to provisions of section 36(1)(va) r.w.s. 2(24)(x) and 43B of the Act, in our considered view, said claim comes under sub clause (ii) of section 143(1) which says that incorrect claim, if such incorrect claim is apparent from any information in the return, it needs to be adjusted while computing income u/s. 143(1)(a) of the Act. Therefore, we reject the argument of the assessee. Disallowance of deduction u/s. 80JJAA - return is filed beyond the due date of filing return of income u/s. 139(1) - HELD THAT - As up to assessment year 2020-21, there is no provisions u/s. 143(1)(a) of the Act to make any adjustments towards Chapter VI-A deductions while processing return of income u/s. 143(1)(a) of the Act. Therefore, we are of the considered view that even if assessee does not file return of income on or before due date prescribed u/s. 139(1) then no adjustment can be made towards Chapter VI-A deductions under the head C-deductions in respect of certain income. Since, deduction u/s. 80JJAA comes under Chapter VI-A under the head C, in our considered view, while processing return of income for the assessment year 2018-19, the AO cannot make any adjustments while processing return of income u/s. 143(1)(a) - AO is erred in making additions towards deduction claimed u/s. 80JJAA of the Act, while processing return of income u/s. 143(1)(a) of the Act, and thus, we direct the AO to delete additions made towards deduction claimed u/s. 80JJAA of the Act. Decided in favour of assessee.

Summary

Issues Involved:
The judgment involves issues related to adjustments under sections 143(1)(a)(ii) and 143(1)(a)(iv), disallowance of ESI and EPF contributions, disallowance of deduction under section 80JJAA, additional tax levy, surcharge, cess, and computation of interests under sections 234A, 234B, and 234C for the assessment year 2018-19.

Disallowed ESI and EPF Contributions:
The appellant contested the disallowance of ESI and EPF contributions under sections 143(1)(a)(ii) and 143(1)(a)(iv), arguing that the adjustments made were illegal and beyond the powers conferred. The tribunal upheld the disallowance, citing the Supreme Court's decision that belated remittance of employee contributions cannot be allowed under the Income-tax Act.

Disallowance of Deduction under Section 80JJAA:
The issue of disallowance of deduction claimed under section 80JJAA was raised. The appellant argued that the deduction should not be disallowed solely based on the delayed filing of the return. The tribunal agreed with the appellant, stating that adjustments towards Chapter VI-A deductions could not be made for the assessment year 2018-19 under section 143(1)(a) due to the absence of provisions at that time.

Conclusion:
The tribunal partly allowed the appeal, directing the deletion of additions made towards the deduction claimed under section 80JJAA of the Act. The judgment emphasized the importance of complying with the provisions of the Income-tax Act and highlighted the significance of timely filings and adherence to statutory requirements in claiming deductions and contributions.