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TMI Blog2023 (4) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... PPELLANT(S) NO. 1 FOR THE OPPONENT(S) NO. 1 ORDER ( PER : HONOURABLE MR. JUSTICE N. V. ANJARIA ) Heard learned advocate Mr.Jaimin Dave for the appellant. 2. Preferred under Section 260A of the Income Tax Act, 1961, the present Tax Appeal arises out of order dated 17.5.2022 of Income Tax Appellate Tribunal, Ahmedabad SMC Bench in ITA No.55 of 2022 in respect of Assessment Year 2019-20. 2.1 The appellant has framed and proposed following questions of law as substantial questions of law for this Appeal, urging to admit the Appeal for consideration of the said questions, reproduced below, (a) Whether the Income Tax Appellate Tribunal erred in law and in facts in not appreciating that payment of employee s contri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocessing the return, the Assessing Officer made addition in the income of the appellant on the count of delayed deposit of employees contribution of the PF and ESI, total amounting to Rs.8,85,284/-. 3.1 The appellant preferred Appeal before the Commissioner of Income Tax (Appeals) which by order dated 7.12.2021 upheld the view of the Centralized Processing Center which had added the income as above. The Appeal was dismissed on 7.12.2021. When the appellant approached the Income Tax Appellate Tribunal, the Tribunal confirmed the order of the appellate authority as per its judgment dated 17.5.2022, impugned in the present Appeal. 4. The case of the appellant was that once the contribution amount was paid even if with delay, the same co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of liability to be paid by the employer and the second was deemed income as per Section 2(24)(x) of the Act to be treated as held in trust by the employer assessee. It was held that the non obstante clause in Section 43B would not apply in case of amounts which were held in trust as was the case in employee s contribution which was deducted from their income and was not part of employer s income. 5.1. The Supreme Court analysed the relevant provisions in Para.30 to 34 and after noticing the attendant decisions, proceeded to observe, thus, 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 contribut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at were receipts or deductions from employees income; at the time, payment within the prescribed time by way of contribution of the employees share to their credit with the relevant fund is to be treated as deduction (Section 36(1)(va)). The other important feature is that this distinction between the employers contribution Section 36(1)(iv)) and employees contribution required to be deposited by the employer Section 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gation of every assessee under Section 43B. (Para.53) 5.1.3 The Supreme Court finally held, In the opinion of this Court, the reasoning in the impugned judgment that the non-obstante clause would not in any manner dilute or override the employer s obligation to deposit the amounts retained by it or deducted by it from the employee s income, unless the condition that it is deposited on or before the due date, is correct and justified. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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