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TMI Blog2023 (3) TMI 1515X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued u/s 143(1) of the Act arose before the Pune Bench of Tribunal in the case of Cemetile Industries [ 2022 (12) TMI 354 - ITAT PUNE] . CIT(A) was not justified in deleting the addition made in the intimation issued u/s 143(1) of the Act. We accordingly set aside the order of CIT(A) and thus the grounds of Revenue is allowed. - SH. ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SH. YOGESH KUMAR US, JUDICIAL MEMBER For the Assessee : Shri Akshay Uppal, Adv. For the Revenue : Ms. Sangeeta Yadav, Sr. D.R. ORDER PER ANIL CHATURVEDI, AM: This appeal filed by the Revenue is directed against the order dated 12.05.2022 passed by the Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi 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 who had filed its return of income on 27.11.2020 for A.Y. 2019-20 declaring total income of Rs. 61,82,86,370 /-. In the intimation issued u/s 143(1) of the Act by CPC, Bangalore vide Identification No. CPC/1920/A6/2014289684 dated 18.03.2021, the total income was determined at Rs. 66,49,98,020/- inter alia by disallowing Rs. 4,67,11,644/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Fund ESI dues as the same was deposited before the due date of filing of the return of income u/s 139(1) of the Act. He further submitted that the aforesaid addition does not fall within the purview of Section 143(1) as it is a debatable issue and in support of his contention he relied on the decision of Bombay Tribunal in the case of M/s. P.R. Packaging Service vs. ACIT (ITA No. 2376/Mum/2022 order dated 07.12.2022). 8. We have heard the rival submissions and perused the material available on record. The issue in the present ground is with respect to the disallowance of delayed deposit of employee s contribution 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 empl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued thereunder or under any standing order, award, contract of service or otherwise. Thus, it is axiomatic that deposit of the employees share of the relevant funds before the due date under the respective Acts is sine qua non for claiming the deduction. Au Contraire, if the contribution of the employees to the relevant funds is not deposited by the employer before the due date under the respective etc., then the deduction u/s. 36(1)(va) is lost notwithstanding the fact 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) 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 and further that the due date u/s. 139(1) of the Act is alien for this purpose. 6. There is no quarrel that the enunciation of law by the Hon ble Supreme Court is always declaratory having the effect and application ab initio, being, the date of insertion of the provision, unless a judgment is categorically made prospectively applicable. The ld. AR candidly admitted that this judgment will equally apply to the disallowance u/s. 36(1)(va) anent to all earlier years as 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 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t accompanying the return, but in the computation of income, the amount has been taken as Rs. 110/-, leading to inconsistency, requiring an adjustment. Clause (ii) of Explanation (a) covers a situation in which claim is made, say, for a deduction u/s. 80IA for which audit report is required to be furnished, but such report has not been furnished along with the return. Clause (iii) contemplates a situation in which deduction exceeds specified statutory limit. For example, section 24(a) provides for a standard deduction for a sum equal to 30% of the annual value, but the assessee has claimed deduction at 40%. These 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils of contributions received from employees for various funds as referred to in section 36(1)(va) , it is an apparent indication of the disallowance of expenditure u/s 36(1)(va) in the audit report in a case where the actual date of payment is beyond the due date. Though the audit report clearly indicated that there was a delay in the deposit of the employees share in the relevant funds, which was in contravention of the prescription of u/s. 36(1)(va), the assessee chose not to offer the disallowance in computing the total income in the return, which rightly called for the disallowance in terms of section 143(1)(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 `Increas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the amount under consideration and hence no disallowance should have been made. This argument is again bereft of force. The assessee claimed deduction for salary on gross basis, inclusive of the employees share to the relevant funds. To put it simply, if gross salary is of Rs. 100, out of which a sum of Rs. 10 has been deducted as contribution to relevant fund, then the debit of Rs. 100 in the Profit and loss account means deduction has been claimed for Rs. 10 as well. Ex consequenti, if deduction of Rs. 10 is not allowed u/s 36(1)(va) for late deposit of the amount before the due date under the respective Act, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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