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TMI Blog2023 (3) TMI 1508X X X X Extracts X X X X X X X X Extracts X X X X ..... tal income shall be computed after making adjustments inter-alia on account of incorrect claim, if such incorrect claim is apparent from any information in the return of income. In the case on hand the adjustments u/s 143(1)(a) has been made on the basis of information contained in the tax audit report with respect to the belated payments of employees contribution of EPF and ESI paid beyond the due dates prescribed under the respective Act and these various funds are referred in section 36(1)(va) of the Act. The information gives the details of due date of payment, actual date of payment to the concerned authorities and these payments have been made beyond the due dates specified in the respective Acts i.e. Provident Fund Act ESI Act, which attracts the provisions of section 36(1)(va) r.w.s. 2(24)(x) of the Act, leading to disallowance of this sum to the extent not paid on or before the due date stipulated in the respective PF and ESI Act. Disallowance made by way of adjustment by CPC has been rightly upheld by the Ld.CIT(A). The above view has been taken in the case of Sree Gokulam Chit and Finance Co.P.Ltd [ 2022 (12) TMI 1528 - ITAT CHENNAI] and also the ratio laid down in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loyees contribution to PF and ESI. 4. The learned Commissioner of Income Tax (Appeals) ought to have considered that the disallowance is not warranted in as much as the Employees contribution to PF and ESI were remitted before the due date of filing the return of income u/s 139(1) of the Act. 5. The learned Commissioner of Income Tax (Appeals) ought to have considered that the amendments made by Finance Act, 2021 to S.36(1)(va) and s.43B are applicable w.e.f. 01.04.2021 and do not apply for the year under consideration. 6. Any other grounds may be urged at the time of hearing. 5. It is the submission of the assessee that the CPC , vide intimation u/s 143(1) disallowed an amount of Rs.4,50,886/- u/s 36, (Rs.3,92,090/- being the amount of PF and Rs.58,796/- being the amount of ESI contribution). He further contended that the CPC is not justified in disallowing the employees share of contribution of PF and ESI on account of late payment, even though the same were paid before the due date of filing the return of income u/s 139(1). He further contended that the Ld.CIT(A) ought to have considered that the amendments made by Finance Act, 2021 to section 36(1)(va) and section 43B are appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrect claim or there is no audit objection etc. which is mentioned u/s 143(1) of the Act. For the sake of clarity and convenience, we extract section 143(1) of the Act as under : Assessment. 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: (i) any arithmetical error in the return; (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under subsection (1) of section 139; (iv) disallowance of expenditure 68[or increase in income] indicated in the audit report but not taken into account in computing the total income in the return; (v) disallowance of deduction claimed under 69[section 10AA or under any of the provisions of Chapter VI-A under the heading C. Deductions in respect of certain incomes , if] the return is furnished beyond the due date specified under sub-sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn; (ii) in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished; or (iii) in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction; (b) the acknowledgement of the return shall be deemed to be the intimation in a case where no sum is payable by, or refundable to, the assessee under clause (c), and where no adjustment has been made under clause (a). Now the question arises in view of the provisions of section 143(1)(a) of the Act, while processing the return of income filed by the assessee, the total income or loss shall be computed after making the following adjustments as described u/s 143(1)(a)(ii) of the Act i.e. an incorrect claim, if such claim is apparent from any information in the return or not. The Memorandum of Finance Bill, 2008 as well as Finance Bill, 2016 explaining the provisions of section 143(1)(a)(ii) of the Act will explain the situation, which is reproduced as under : Memorandum to Finance Bill, 2008 Correction of arithmetical mistakes and adjustment of incorrect claim under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the total income, (emphasis supplied). For this purpose the Department is in the process of establishing a system for Centralized Processing of Returns. To facilitate this. it is also proposed that- (a) the Board may formulate a scheme with a view to expeditiously determine the tax payable by, or refund due to, the assessee, (b) the Central Government may issue a notification in the Official Gazette, directing that any of the provisions of this Act relating to processing of returns shall not apply or shall apply with such restrictions, modifications and adaptations as may be specified in the notification. However, such direction shall not be issued after 31st March 2009; ( c) every notification shall be laid before each House of Parliament as soon as such notification is issued. Along with the notification, the scheme referred above is also required to be laid before each House of Parliament. Similar amendment has also been proposed in section 1 I5WE of the Income-tax Act, relating to fringe benefits. These amendments will take effect from 1st April, 2008. Memorandum to Finance Bill 2016 Legislative framework to enable and expand the scope of electronic processing of informat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese various funds are referred in section 36(1)(va) of the Act. The information gives the details of due date of payment, actual date of payment to the concerned authorities and these payments have been made beyond the due dates specified in the respective Acts i.e. Provident Fund Act ESI Act, which attracts the provisions of section 36(1)(va) r.w.s. 2(24)(x) of the Act, leading to disallowance of this sum to the extent not paid on or before the due date stipulated in the respective PF and ESI Act. I am of the firm view that disallowance made by way of adjustment by CPC has been rightly upheld by the Ld.CIT(A). The above view has been taken by the coordinate bench of ITAT, Chennai in the case of Sree Gokulam Chit and Finance Co.P.Ltd. Vs. DCIT, Chennai vide I.T.A.No.765/CHNY/2022 dated 21.12.2022 and also the ratio laid down by the Hon ble Madras High Court in the case of AA520 Veerappampalayam Primary Agricultural Cooperative Credit Society Ltd. Vs. Deputy Commissioner of Income Tax [2022] 138 taxmann.com 571 (Madras) , wherein, it was categorically held that if there is any incorrect claim made in the return, the disallowance made by the CPC is valid. Therefore, I am of the view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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