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TMI Blog2023 (11) TMI 1294X X X X Extracts X X X X X X X X Extracts X X X X ..... upreme Court in the case of Checkmate Services Pvt. Ltd. [ 2022 (10) TMI 617 - SUPREME COURT] which has been followed by the ld. CIT(A) while considering the appeals of the assessees. We do not find any infirmity in the same and the same is upheld. Accordingly, the main grounds raised by the assessees for all the years under consideration also stands dismissed. - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER For the Appellant: Shri Padam Chand Khincha, A.R For the Respondent: Shri Nischal B., D.R ORDER PER BEENA PILLAI, JUDICIAL MEMBER: The present appeals arises out of the following CIT(A) orders, the details of which are as under: Appellant Respondent CIT(A) Assessment year Shabari Telecable Network Pvt. Ltd. ACIT, Circle 6(1)(1), Bangalore 02.03.2023 2018-19 Shabari Telecable Network Pvt. Ltd. ACIT, Circle 6(1)(1), Bangalore 02.03.2023 2019-20 Shabari Telecable Network Pvt. Ltd. ACIT, Circle 6(1)(1), Bangalore 02.03.2023 2020-21 Manikandan Vazhukkapara Kumaran ACIT, Circle- 1(1)(1), Bangalore 13.03.2023 2018-19 2. At the outset, the ld. A.R. has submitted that there is a delay in filing the above appeals before this Tribunal. It is submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d consideration of the Hon'ble Bench, which involve a pure legal issue and go to the root of the matter. 1. Validity of adjustment under section 143(1)(a) 1.1. The learned Assistant Director of Income Tax, Centralized Processing Cell, Bangalore [hereinafter referred to as 'ADIT, CPC'] has erred in passing the intimation under section 143(1) in the manner passed by him. 1.2. The learned ADIT, CPC has erred in not appreciating that the law, at the time of passing the impugned intimation, was in favour of the Appellant allowing the claim of deduction under section 36(1)(va) in respect of payments of contributions from employees before the due date of filing return of income under section 139. Hence, the impugned adjustment is incorrect and bad in law. 1.3. The learned ADIT, CPC has erred in not appreciating that: i) the impugned adjustment is not a permissible adjustment under section 143(1)(a). ii) ii) the impugned adjustment does not fall within the parameter? of sub-clause (iv) of clause (a) to section 143(1), as the same is not an expenditure per se; iii) the scope of sub-clause (iv) of clause (a) to section 143(1) was expanded by addition of the words 'increase in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts are already on record and there is no necessity of investigation of any fresh facts for the purpose of adjudication of above ground. Accordingly, by placing reliance on the judgement of Hon ble Supreme Court in the case of NTPC Vs. CIT 229 ITR 383 (SC) we inclined to admit the additional grounds for the purpose of adjudication as there was no investigation of any fresh facts otherwise on record and the action of the assessee is bonafide. 5.3 Accordingly, the applications filed by assessee for admission of additional grounds on this preliminary legal issue in all the appeals before us stands admitted. 5.4 Before we adjudicate the issues raised by assessee on merits, it is necessary to consider the common legal issue raised by assessee raised in the additional grounds in all appeals. 5.5 It is submitted that, the assessee filed its return of income declaring total income for the relevant assessment years as under: ITA No./Assessment year Return of income filed on Total income declared (Rs.) 577/Bang/2023 2018-19 07.10.2018 54,23,830/- 578/Bang/2023 2018-19 29.10.2018 2,08,09,950/- 579/Bang/2023 2019-20 30.10.2019 2,92,81,530/- 580/Bang/2023 2020-21 07.01.2021 4,29,91,760/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gorically mentioned. He submitted that the response of the assessee has been considered and thereafter the disallowance has been made in the intimation issued to the assessee. He opposed the objection raised by the assessee regarding the submissions filed not being considered. 7. We have perused the arguments advanced by both sides based on the materials placed on record. It is very clear that a communication was issued to assessee proposing for such disallowances in the hands of the assessee admittedly, which is based on the audit report and Form 3CD. There is no evidence with the assessee to establish that the reply filed by the assessee has not been considered by the ld. AO. Be that as it may, in the decision by Hon ble Madras High Court in case of AA 520 Veerapampalyam Primary Agricultural Cooperative Credit Society Ltd. Vs. DCIT reported in (2022) 138 taxmann.com 571, it was held as under: The scope of an intimation u/s 143(1)(a) of the Act extends to the making of adjustments based upon errors apparent from the return of income and patent from the record. Thus, to say that the scope of incorrect claim should be circumscribed and restricted by the explanation, which implies th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acted as under. 38. Mode of payment of contributions (1) The employer shall, before paying the member his wages in respect of any period or part of period for which contributions are payable, deduct the employee's contribution from his wages which together with his own contribution as well as an administrative charge of such percentage [of the pay (basic wages, dearness allowance, retaining allowance, if any, and cash value of food concessions admissible there on) for the time being payable to the employees other than excluded employee and in respect of which provident fund contribution payable, as the Central Government may fix. He shall within fifteen days of the close of every month pay the same to the fund [electronic through internet banking of the State Bank of India or any other Nationalized Bank] [or through PayGov platform or through scheduled banks in India including private sector banks authorized for collection on account of contributions and administrative charge: (2) The employer shall forward to the Commissioner, within twenty-five days of the close of the month, a monthly abstract in such form as the Commissioner may specify showing the aggregate amount of recov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be that the employer would be at liberty to make payment of the contribution concerned within 15 days (subject however to the further grace period) from the end of the month during which the disbursement of the salary is actually made and the contribution of the provident fund are, thus, generated, in as much as, the provision relating to the disallowance of such contribution on account of delay is rather an artificial provision. In our view, a liberal approach has got to be made to this issue. Ultimately, therefore, we reverse the order of the lower authorities and direct the Assessing Officer to examine whether the payments of contribution in the present case were made within 15 days (allowed with further grace period of 5 days) from the close of the respective months during which the disbursement of the salary/wages were actually made. The Assessing Officer should recompute the amount disallowable, if any, on the above basis and take appropriate action accordingly. 2.5 Considering the above decision, the Bangalore Bench of the Tribunal in MTR Maiya s v ITO (2023) 152 taxmann.com 189 (Bang-Trib) has remitted the issue on examining the aspect of due date, to the file of the AO. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The ld. D.R. submitted that, in the light of provisions of section 36(1) r.w.s. 43B of the Act, the amount in respect of employees contribution should be allowed only if it is paid within the prescribed time period as per the relevant Welfare Funds Act. He submitted that once there is a delay in payment of the contribution beyond the dates prescribed in the concerned statutory fund, the same would cease to be allowable as a deduction and such employee s contribution must be treated as enrichment of income in the hands of the assessee. He placed reliance on the specific observations by Hon ble Supreme Court (supra) of section 36(1)(va) r.w.s. 2(24)(x) section 43B of the Act to establish that; i) there is no link between the nature and character of the employers contribution and the amount retained by the employer from out of employees contribution by way of deduction in which one was in the nature of liability to be paid by the employer; ii) and that such deemed income as per section 2(24)(x) of the Act is to be treated as held in trust by such employer. 9.1 He placed emphasis of para 30 to 34 of the decision of Hon ble Supreme Court (supra) in support of his contention, wherein the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd and Miscellaneous Provisions Act, 1952 in his argument in support. 10.4 He thus submitted that in terms of section 38 of the Act, Employees provident fund and Miscellaneous Provisions Act, 1952 refers to the time limit for depositing the contribution within 15 days of the close of the month must be to the month in which the salary payment is made. He submitted that the entire additional evidence filed before this Tribunal establishes that there is a delay in paying salary to the employees and therefore, if that is taken into consideration, there cannot be any delay that would be attributable towards the deposit of employees contribution to the relevant fund. He also submitted only a minor amount would fall within the purview of disallowance u/s 36(1)(va) of the Act. The ld. A.R. thus prayed that the additional evidence filed by assessee may be admitted and the issue may be remanded to the ld. AO for necessary verification based on such additional evidences. 10.5 At the request of the ld. A.R., we had directed the ld. D.R. to carry out necessary verifications and sufficient time was granted to the ld. D.R. in order to respond to the additional evidence filed by assessee. 10.6 The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tribution before paying the employee his wages and further requires to deposit such contribution withheld by the employer along with employer s own contribution to the relevant fund held by the Government. It is further requires that the employer shall with in 15 days of the close of every month pay the same to such fund along with administrative charges. It is thus, clear that after deducting the employees contribution towards the fund the same has to be deposited with the Government within 15 days of the close of every month. In our opinion, reference to 15 days of the close of every month has to be in relation to the month during which the payment of wages is to be made and the corresponding liability to deduct employees contribution to such fund immediately arises. Further, the expression with in 15 days of the close of every month , therefore, must be interpreted as having reference to the close of the month for which the wages are required to be paid with corresponding date to deduct employees contribution and to deposit the same with the relevant fund. 10.9 On perusal of section 38 of the Employees Provident Fund Miscellaneous Provisions Act, 1952, the phrase used in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmation from the tax auditor. In our opinion, such arguments to tarnish a professional is not appreciated. Based on the above discussion, we do not find any merit to consider the same. 10.14 We, therefore, do not find any merit in the new argument raised by the assessee in additional ground No.2 requesting to remand the issue back to the Ld. AO to verify the claim of disallowance in the light of the additional evidences filed by assessee. We, therefore, dismiss additional ground No.2 raised the assessee, as such argument is not in consonance with the provisions of Section 38 under Employees Provident Fund and Miscellaneous Provisions Act, 1952. Accordingly, the additional ground nos. 2-3 raised by assessees stands dismissed in all the appeals. 10.15 In the main ground No.2, the assessee has commonly raised the following issue, which has been reproduced from ITA No.578/Bang/2023. 2. Grounds relating to disallowance of employee contribution to provident fund 2.1. The learned CIT(A), NFAC, Delhi erred in confirming the disallowance of employee contribution to provident fund amounting to Rs.77,17,455 in computing the business income of the appellant under Chapter IVD of the Income tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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