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TMI Blog2022 (11) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... ENA PILLAI , JUDICIAL MEMBER AND Ms. PADMAVATHY S , ACCOUNTANT MEMBER Appellant by : Smt. Sheetal Borkar , Advocate Respondent by : Shri K R Narayana , Addl. CIT ( DR ) ( ITAT ) , Bengaluru ORDER Per Padmavathy S. , Accountant Member This appeal by the assessee is against the order of the CIT(Appeals), National Faceless Assessment Centre, Delhi [NFAC] dated 27.09.2022 for the assessment year 2018-19. 2. The only issue in this appeal is regarding disallowance of delayed payment of employee contribution to Employees State Insurance and Provident Fund of Rs.75,57,462 u/s. 43B r.w.s. 36(1)(va) of the Act by the revenue authorities. 3. The assessee is an individual and filed return of under the head income from bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the employees contribution paid before due date for filing the return of income u/s.139(1) whether otherwise allowable u/s.43B, putting to rest the contradicting decisions of various High Court. The relevant extract of the decision is as given below 52. When Parliament introduced Section 43B, what was on the statute book, was only employer s contribution (Section 34(1)(iv)). At that point in time, there was no question of employee s contribution being considered as part of the employer s earning. On the application of the original principles of law it could have been treated only as receipts not amounting to income. When Parliament introduced the amendments in 1988-89, inserting Section 36(1)(va) and simultaneously inserting the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36(1)(va)) was maintained - and continues to be maintained. On the other hand, Section 43B covers all deductions that are permissible as expenditures, or out-goings forming part of the assessees liability. These include liabilities such as tax liability, cess duties etc. or interest liability having regard to the terms of the contract. Thus, timely payment of these alone entitle an assessee to the benefit of deduction from the total income. The essential objective of Section 43B is to ensure that if assessees are following the mercantile method of accounting, nevertheless, the deduction of such liabilities, based only on book entries, would not be given. To pass muster, actual payments were a necessary pre-condition for allowing the expend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain 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. Nevertheless, the assessees are given some leeway in that as long as deposits are made beyond the due date, but before the date of filing the return, the deduction is allowed. That, however, cannot apply in the case of amounts which are held in trust, as it is in the case of employees contributions- which are deducted from their income. They are not part of the assessee employer s income, nor are they heads of deduction per se in the form of statutory pay out. They are others income, monies, only deemed to be income, with the obj ..... X X X X Extracts X X X X X X X X Extracts X X X X
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