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TMI Blog2023 (6) TMI 1405X X X X Extracts X X X X X X X X Extracts X X X X ..... dustries [ 2022 (12) TMI 354 - ITAT PUNE] - Appeal of the assessee is dismissed. - SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER For the Assessee : Shri Tushar Hemani, Sr. Advocate For the Revenue : Shri Aashish Rajesh Revar, Sr. DR ORDER PER ANIL CHATURVEDI, AM: This appeal filed by the assessee is directed against the order dated 23.12.2021 passed by the Commissioner of Income Tax (Appeals)- National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as CIT(A) ] relating to Assessment Year 2019-20. 2. Brief facts of the case, as culled out from the material on record, are as under:- 3. Assessee is a company stated to be engaged in the business of executing turnkey project of gas pipelines and other engineering services. Assessee filed its return of income for AY 2019-20 on 09.10.2019 declaring total income at Rs. 27,52,21,981/-. The return of income was processed by CPC and intimation was issued u/s 143(1) of the Income-tax Act, 1961 [hereinafter referred to as the Act ]. Thereafter, assessee made an application for rectification u/s. 154 on 21.01.2021. CPC issued a rectification order u/s. 154 of the Act on 28.01.2021, wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though the assessee has raised various grounds of appeal, but the sole controversy that requires adjudication is with respect to the addition of Rs. 32,79,926/- made u/s. 36(1)(va) of the Act on account of delayed deposit of employees contribution towards PF ESI. 8. Before us, the learned AR submitted that in the intimation dated 17.12.2020 passed u/s 143(1) of the Act (Document Identification No. CPC/1920/2012626218), disallowance of Rs. 32,79,926/- has been made on account of delayed deposit of employees contribution towards PF ESI. He further submitted that though there has been a slight delay in the deposit of employees share of contribution, but however all the amounts collected on behalf of the employees have been deposited with the appropriate authorities before the filing of the return of income and therefore no disallowance under Section 36(1)(va) of the Act is called for. He further submitted that even if there is a delay in deposit of employees contribution to PF and ESI, but the addition could not have been made by the AO in the intimation issued under Section 143(1) of the Act, because the disallowance u/s. 36(1)(va) being a debatable and controversial issue and in vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of PF ESI in the intimation passed u/s 143(1) of the Act. We find that Hon ble Supreme Court in the case of Checkmate Services Pvt. Ltd. (supra) has held that the contribution by the employees to the relevant funds is the employer s income u/s 2(24)(x) of the Act and the deduction for the same can be allowed only if such amount is deposited in the employee s account in the relevant fund before the date stipulated under the respective Acts. Thus the deduction u/s 36(1)(va) of the Act can be allowed only if the employees share in the relevant funds is deposited by the employer before the due date stipulated in respective Acts. We find that identical issue of disallowance of delayed deposit of PF/ESI dues in the intimation issued u/s 143(1) of the Act arose before the Pune Bench of Tribunal in the case of Cemetile Industries vs. ITO in ITA No. 693/PUN/2022 and others. The Co-ordinate Bench of Tribunal vide order dated 23.11.2022 has observed as under: 3. We have heard . It is undisputed that the audit report filed by the assessee indicated the due dates of payment to the relevant funds under the respective Acts relating to employee s share and the said amounts were deposited by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act that the share of the employees had already crystallized as income of the employer u/s. 2(24)(x) of the Act. 5. Adverting to the facts of the case, it is seen that the assessee claimed the deduction for the employees share for depositing the same in the relevant funds beyond the due date as given in Explanation 1 to section 36(1)(va) on the strength of section 43B. The latter section opens with a non-obstante 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well for the assessments completed u/s. 143(3) of the Act. He, however, accentuated the fact that the instant batch of appeals involves the disallowance made u/s. 143(1) of the Act. It was argued that no prima facie adjustment can be made in the Intimation issued u/s 143(1) of the Act unless a case is covered within the specific four corners of the provision. It was stressed that the action of the AO in 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 makin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e situations warrant an adjustment. It is obvious that none of the three clauses of Explanation (a), defining an incorrect claim apparent from any information in the return, gets magnetized to the facts of the present case. 10. Now we turn to clause (iv) of section 143(1)(a) which provides for `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 . 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) of the Act. 11. The ld. AR vehemently argued that it was a case of increase in income which has been enshrined in clause (iv) of section 143(1)(a) w.e.f. 01-04-2021 and hence cannot be take note of for the year under consideration. In our considered opinion, the contention is ill-founded. We have noted 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it would mean that the claim of Rs. 10 included in Rs. 100 is not allowed deduction. 13. The ld. AR referred to section 5 of the Payment of Wages Act, 1936, to contend that deduction made from an employee s salary for the month of October should suffer disallowance only if it is not paid by 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 wage-period 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 doe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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