2023 (6) TMI 388 - AT - Income Tax

Disallowance u/s 43B - non-payment of outstanding amount of ESI, PF, CGST and SGST not paid before the due date of filing of return of income - HELD THAT - Section 43B cannot be invoked for the above stated payments and, therefore, we find merit in the contention of assessee for the inadvertent mistake committed by the tax auditor by reporting the detail of expenses payable as on March, 2017 on which provisions of Section 43B of the Act can be invoked have been wrongly reported in the column 26(i)(B)(b) in Form 3CB attached to the tax audit report, which is meant for those payments which fall under the provisions of Section 43B of the Act and are not deposited before the due date of filing of return. Considering the fact that on the alleged sum provisions of Section 43B of the Act are not applicable as they have been paid before the due date of filing u/s 139(1) of the Act, the said disallowance deserves to be deleted. Allow the ground raised by the assessee and thus delete the addition. Decided in favour of assessee. Disallowance employees contribution made towards PF - Though the assessee has claimed that wages were disbursed in the month of May and June, 2017 i.e., subsequent month for which wages were payable and thus claimed that due dates were subsequent to the months of payments and thus there is no delay - HELD THAT - No merit in this contention of the assessee as the liability to pay PF /ESI fall due on the basis of month for which salary is payable. Now, considering the month for which wages are payable the due date for depositing the said sum was 15/06/2017 and 15/07/2017. However, the payment has been made on 18/05/2017 and 17/06/2017, which is after the due dates. Hon ble Supreme Court in the case of Checkmate Services Pvt. Ltd. 2022 (10) TMI 617 - SUPREME COURT wherein it has been held that deduction u/s 36(1)(va) in respect of delayed deposit of amount collected towards employees contribution to PF cannot be claimed when deposited within the due date of filing of return even when read with Section 43B of the Income-tax Act,1961. Accordingly, the sum is not allowable u/s 36(1)(va) of the Act and is deemed to be income u/s 2(24)(x) of the Act. Accordingly, we dismiss this ground raised by the assessee.

Summary

Issues Involved:
The judgment involves two appeals related to Assessment Year 2018-19. The common issues raised in both appeals are the disallowance under section 43B of the Act for non-payment of outstanding amounts and the disallowance of employees' contribution towards PF.

Disallowance under Section 43B of the Act:
The appellant argued that the alleged sum had been paid before the due date of filing the return, thus no disallowance was warranted under section 43B. The details provided by the appellant showed that the amounts towards ESI, PF, CGST, and SGST had been paid before the due date of filing the return. The Tribunal found merit in the appellant's contention and held that the disallowance under section 43B was not applicable. Consequently, the addition of Rs. 4,38,526 was deleted.

Employees' Contribution to PF:
The appellant claimed that the payments towards employees' contribution to PF were made before the due dates. However, the Tribunal disagreed, stating that the payments were made after the due dates for depositing the said sums. Referring to a recent Supreme Court decision, the Tribunal held that the sum was not allowable under section 36(1)(va) of the Act and deemed it as income under section 2(24)(x) of the Act. As a result, this ground raised by the appellant was dismissed.

Conclusion:
The Tribunal dismissed the appeal in ITA No. 278/Kol/2023 and partly allowed the appeal in ITA No. 279/Kol/2023. The judgment was pronounced on 30th May, 2023, in Kolkata.