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2023 (7) TMI 684 - AT - Income TaxDisallowance of delayed payment of employees contribution to the provident fund u/s 36(1)(va) - HELD THAT - The fact clearly shows that now this issue is squarely covered by the decision of Checkmates Services Pvt. Ltd. 2022 (10) TMI 617 - SUPREME COURT According to that decision if the employees contribution to the provident fund is not deposited within prescribed the due dates as per the Provident Fund Act, that same becomes a income of the assessee u/s 2(24)(x) and if same was not deposited within the due date prescribed of the respective statute, same is not allowable to the assessee as deduction under the head of business and profession. Therefore, this appeal is those squarely covered against the assessee. Counting due date of depositing employees contribution to the provident fund - Whether Shall be counted from the end of the month in which salary is actually paid? - HELD THAT - There is no relevance of the date of the payment of wages for reckoning the limit of 15 days. Even in that case also, it was not decided that due date is to be taken from the date of payment. The issue before the honourable High Court was that whether the employer can decide a wage month or not. Therefore, even otherwise, that decision does not help the case of the assessee. Therefore, as the law is clear and not at all ambiguous, as held by the two honourable high courts, there is no reason to set-aside issue back to the file of the learned assessing officer to take any other due date other than the date to be taken from the date when the wages becomes due. Accordingly, this argument is also rejected.
Issues Involved:
1. Disallowance of delayed payment of employees' contribution to the provident fund under section 36(1)(va) of the Income Tax Act. 2. Alternative claim regarding the due date for depositing employees' contribution to the provident fund. Summary: Disallowance of Delayed Payment: The appellant, Mindcrest (India) Pvt. Ltd., contested the disallowance of Rs. 7,17,65,000/- for delayed payment of employees' contribution to the provident fund under section 36(1)(va) of the Income Tax Act. The payments were made beyond the due date prescribed under the respective provident fund Act but before the due date of filing the income tax return. The return of income was processed, resulting in an intimation dated 30.04.2020, with an adjustment leading to the disallowance. The CIT(A) upheld the disallowance, citing amendments in the recent financial Act and various High Court decisions, without considering the jurisdictional High Court's decision in 368 ITR 749. Supreme Court Decision: The matter reached the ITAT, which reinstated the appeal following a miscellaneous application. The ITAT noted that the issue is covered by the Supreme Court's decision in Checkmates Services Pvt. Ltd. vs. CIT (2022) 143 taxmann.com 178 (SC), which held that if employees' contribution to the provident fund is not deposited within the prescribed due dates, it becomes the assessee's income under section 2(24)(x) and is not allowable as a deduction under section 36(1)(va). Alternative Claim on Due Date: The assessee argued that the due date for depositing employees' contribution should be counted from the end of the month in which the salary is paid, relying on three decisions of the co-ordinate bench and the Delhi High Court's decision in Delhi Press Patra Prakshan Ltd. The Departmental Representative countered that the provisions of section 38 of the Provident Fund Act are clear, and the 15-day period should be counted from the end of the month in which wages become due. ITAT's Analysis: The ITAT examined the rival contentions and the lower authority's order, noting that the details of contributions received and paid before the due date were provided. The ITAT referred to the Supreme Court's decision in Checkmates Services Ltd., which categorically held that contributions not paid within the due dates prescribed under the respective acts are not allowable under section 36(1)(va). High Court Decisions: The ITAT also considered the Gujarat High Court's decision in Ask Me Lab Con Services Ltd. v. Income Tax Officer and the Madras High Court's decision in Commissioner of Income-Tax v. Madras Radiators and Pressings Ltd., which clarified that the due date for depositing contributions is 15 days from the close of the month for which wages are payable, not from the date of payment of wages. Conclusion: The ITAT rejected the assessee's alternative claim, stating that the law is clear and unambiguous, and there is no reason to set aside the issue to the assessing officer for reconsideration. The appeal of the assessee was dismissed. Order Pronouncement: The order was pronounced in the open court on 14.07.2023.
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