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TMI Blog2022 (10) TMI 1249X X X X Extracts X X X X X X X X Extracts X X X X ..... hether otherwise allowable u/s.43B, putting to rest the contradicting decisions of various High Court. In view of the above decision of the Hon ble Supreme Court, we hold that the employees contribution to PF and ESI should be remitted before the due date as per explanation to section 36(1)(va) i.e. on or before the due date under the relevant employee welfare legislation like PF Act, ESI Act etc., for the same to be otherwise allowable u/s.43B. We therefore see no reason to interfere with the order of the CIT(Appeals). The grounds taken by the assessee on this issue is dismissed. Disallowance of Club fees - AO confirmed the disallowance while completing the assessment u/s.143(1) since the assessee did not file any response - CIT(Appeals) c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... djustment as given below:- 1. Delay in payment of Employee contribution to Provident Fund - Rs. 20,11,696. 2. Club fees Rs. 9,52,420. 3. The assessee preferred an appeal against the intimation u/s. 143(1) before the CIT(Appeals). The assessee submitted before the CIT(Appeals) that the provisions of section 143(1)(a) were not applicable in the additions made in the instant case i.e., payment of Employee contribution to PF paid within the due date for filing the return of income u/s. 139(1) and the Club expenditure. The assessee also submitted that a mere disclosure of the amount in the tax audit report in Form3CD cannot per se qualify for disallowance since it is only a disclosure that is made in the tax audit report and were not expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act etc. failing which the same would be treated as income in the hands of the employer u/s.2(24)(x). 7. We have heard both the parties and perused the material on record. We notice that the Hon ble Supreme Court in the case of Checkmate Services (supra) has considered the issue of whether 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 con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the contract. Thus, timely payment of these alone entitle an assessee to the benefit of deduction from the total income. The essential objective of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted before the due date as per explanation to section 36(1)(va) i.e. on or before the due date under the relevant employee welfare legislation like PF Act, ESI Act etc., for the same to be otherwise allowable u/s.43B. We therefore see no reason to interfere with the order of the CIT(Appeals). The grounds taken by the assessee on this issue is dismissed. Club fees 9. The AO noticed that an amount of Rs. 9,68,075 disclosed as incurred towards club expenses in clause 21(a) of the tax audit report has not been disallowed in the computation of income by the assessee. The AO confirmed the disallowance while completing the assessment u/s.143(1) since the assessee did not file any response. The CIT(Appeals) confirmed the same on the same ground t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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