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TMI Blog2023 (6) TMI 1207X X X X Extracts X X X X X X X X Extracts X X X X ..... a, JCIT, Sr.DR ORDER Per A.D. Jain, Vice President: This is assessee s appeal against the order of the ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 14.09.2022, for the Assessment Year 2018-19. 2. Briefly the facts of the case are that the Assessee s return was processed by the CPC and order under section 143(1) was passed wherein the disallowance invoking the provisions of Section 143(1)(a)(iv) was made for fault of the assessee not to pay the employees contribution to PF/ESI before the prescribed due date under the relevant statue. Against the said intimation and the disallowance so made under section 36(1)(va) r.w. s 143(1)(a)(iv) of the Act, the assessee filed an appeal before the Ld. CIT(A), NFAC. As per the Ld. CIT(A), the employees contribution can be allowed as deduction only where it had been paid within the prescribed due date under the relevant welfare funds and this is the position of law and has always been the case, as apparent from the clarification brought in by the amendment to the provisions which apply retrospectively. It was accordingly held that the disallowance made under section 143(1) by the CPC on account of assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te clause and provides that a deduction otherwise allowable in respect of: `(b) any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees shall be allowed only in that previous year in which such sum is actually paid. The first proviso to section 43B states that: `nothing contained in this section shall apply in relation to any sum which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return. The main provision of section 43B, providing for the deduction only on actual payment basis, has been relaxed by the proviso so as to enable the deduction even if the payment is made before the due date of furnishing the return u/s 139(1) of the Act for that year. The claim of the assessee is that the deduction becomes available in the light of section 36(1)(va) read with section 43B on depositin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n making the extant disallowance does not fall in any of the clauses of section 143(1). 7. We fully agree with the proposition bolstered by the ld. AR that adjustment to the total income or loss can be made only in the terms indicated specifically u/s.143(1) of the Act. Now, we proceed to examine if the case falls under any of the clauses. The rival parties are consensus ad idem that the case can be considered as falling either under clause (ii) or (iv) of section 143(1). For ready reference, we are extracting the relevant provision as under: 143. (1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, namely: (a) the total income or loss shall be computed after making the following adjustments, namely: (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (iv) disallowance of expenditure or increase in income indicated in the audit report but not taken into account in computing the total income in the return 8. Sub-section (1) of section 143 states that a return shall be processed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or increase in income indicated in the audit report but not taken into account in computing the total income in the return . The words or increase in income in the above provision were inserted by the Finance Act, 2021 w.e.f. 01-04-2021. As such, this part of the provision cannot be considered for application during the years under consideration, which are anterior to the amendment. We are left with ascertaining if the disallowance made u/s 36(1)(va) in the Intimation under section 143(1)(a) can be construed as a `disallowance of expenditure indicated in the audit report not taken into account in computing the total income in the return . Point 20(b) of the audit report in Form 3CA has columns Serial number; Nature of fund; Sum received from employees; Due date for payment; The actual amount paid; and The actual date of payment to the concerned authorities. A copy of audit report in one of the cases under consideration, namely, S.M. Auto Stamping Pvt. Ltd. (ITA No.521/PUN/2022) has been placed on record. Point 20(b) of the audit report gives the `Sum received from employees at Rs.21,800/-. `Due date for payment has been reported as 15-07-2017 and `The actual date of payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above that clause (iv) of section 143(1)(a) talks of two different limbs, namely, `disallowance of expenditure and `increase in income by means of indication in the audit report. Both the limbs are independent of each other. The indication in the audit report for `Increase of income should be qua some item of income and not increase of income because of the `disallowance of expenditure . Every disallowance of expenditure leads to increase of income. If the contention of the ld. AR is taken to a logical conclusion, then the second expression `or increase in income inserted by the Finance Act, 2021 would be rendered a redundant piece of legislation. It is trite interpretation has to be given to the statutory provisions in such a manner that no part of the Act is rendered nugatory. Distinction in the scope of the two aspects can be understood with the help of the present context only. We have noted that point no. 20(b) of the audit report, dealing with section 36(1)(va), has columns, inter alia, (i) `Sum received from employees ; (ii) `Due date for payment ; and (iii) `The actual date of payment to the concerned authorities . The column (i) having details of the amounts received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15th December. This argument was premised on the language of section 5, which says that the wages of every person employed upon or in any railway, factory or industrial or other establishment upon or in which less than one thousand persons are employed, shall be paid before expiry of the seventh day, after the last day of the wageperiod in respect of which the wages are payable. It was contended that salary for the month of October, 2022 will be paid before the 7th of November, which will result into income of the employer only at the time of payment, making the due date of payment into relevant fund as on or before 15th December and not 15th November. 14. There is no merit in the contention of linking the date of deposit of the employees share in the relevant funds with the date of payment of wages. Section 5 of the Payment of Wages Act simply deals with the Time of payment of wages . It does not stipulate any time limit for deposit of the employees share in the relevant funds. For that purpose, the relevant Acts give a window for depositing the contribution within 15 days of the last month's salary. Thus, contribution to the relevant fund towards the salary for the m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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