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TMI Blog2024 (6) TMI 1272X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - Decided against assessee. - Shri Sonjoy Sarma, Judicial Member And Shri Girish Agrawal, Accountant Member For the Appellant : Shri Devesh Poddar, Advocate. For the Respondent : Shri P. K. Koley, Sr. DR. ORDER PER BENCH: All these appeals by the assessee are directed against the separate orders of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi dated 17.05.2021 28.04.2021 (for AY 2017-18 to 2019-20), 24.05.2021 (for AYs 2018-19 2019-20) arising out of assessment/rectification orders passed u/s. 143(1)/154 of the Income-tax Act, 1961 (hereinafter referred to as the Act ) by DCIT/ACIT, Circle-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds taken by the assessee have come to rest by the recent verdict of the Hon ble Supreme Court in Chekmate Services Pvt. Ltd. Vs. CIT (2022) 143 taxmann.com 178 (SC) dated 12.10.2022 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. Relevant extract of the said judgment is reproduced as under: The deduction made by employers to approved provident fund schemes, is the subject matter of Section 36(1) (iv). It is noteworthy, that this provision was part of the original IT Act; it has largely remained unaltered. On the oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 36(1)(iv). The latter (hereinafter, employers' contribution ) is described as sum paid by the assessee as an employer by way of contribution towards a recognized provident fund . However, the phraseology of Section 36(1)(va) differs from Section 36(1)(iv). It enacts that any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the due date. The essential character of an employees' contribution, i.e., that it is part of the employees' income, held in trust by the employer is underlined by the condition that it has to be deposited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated only as receipts not amounting to income. When Parliament introduced the amendments in 1988-89, inserting Section 36(1)(va) and simultaneously inserting the second proviso of Section 43B, its intention was not to treat the disparate nature of the amounts, similarly. As discussed previously, the memorandum introducing the Finance Bill clearly stated that the provisions especially second proviso to Section 43B - was introduced to ensure timely payments were made by the employer to the concerned fund (EPF, ESI, etc.) and avoid the mischief of employers retaining amounts for long periods. That Parliament intended to retain the separate character of these two amounts, is evident from the use of different language. Section 2(24)(x) too, deem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss, 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 expenditure. The distinction between an employer's contribution which is its primary liability under law in terms of Section 36(1)(iv), and its liability to deposit amounts received by it or deducted by it (Section 36(1)(va)) is, thus crucial. The former forms part of the employers' income, and the later retains its character as an income (albeit deemed), by virtue of Section 2(24)(x) - unless the conditions spelt by Explanation to Section 36(1)(va) are satisfied i.e., depositing such amount received or deducted from the employee on or before the due date. In other wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 object of ensuring that they are paid within the due date specified in the particular law. They have to be deposited in terms of such welfare enactments. It is upon deposit, in terms of those enactments and on or before the due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated as a deduction. Thus, it is an essential condition for the deduction that such amounts are deposited on or before the due date. If such interpretation were to be adopted, the non-obstante clause under Section 43B or anything contained in that provision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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