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TMI Blog2024 (10) TMI 82X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as the Ld. CIT(A) ) passed u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) for AYs 2018-19 and 2019-20, dated 02.04.2024 and 31.01.2024 respectively. Since all the appeals involve identical issues, the same were heard together and are being disposed vide this common order for the sake of brevity and convenience. 2. The grounds of appeal raised by the assessee are reproduced as under: I. ITA No. 1143/Kol/2024(Assessment Year 2018-19) 1. That the order passed u/s 250 is bad in law as well as on facts of the case. 2. That the Hon ble CIT(A), NFAC erred in law as well as on facts of the case by confirming disallowance of Rs. 23,93,177/- of delay in deposit of PF/ESI made by CPC, which was beyond jurisdiction. 3. That the appellant craves to leave, add, amend or adduce any of the grounds of appeal during the course of appellate proceedings. II. ITA No. 1144/Kol/2024 (Assessment Year: 2019-20) 2.1 The grounds of appeal raised by the assessee are reproduced as under: 1. That the order passed u/s 250 is bad in law as well as on facts of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h to bring to our notice a copy of the order in Kathleen Confectioners Vs. DCIT, Circle 32, Kolkata, ITA No. 1187/Kol/2023, dated 09.01.2024 wherein similar issue has been decided against the assessee. He also emphasised that though the issue is covered against the assessee, yet he was not conceding the issue in order to keep the future options open. The issue relating to ground taken by the assessee has come to rest and is no longer res-integra by the verdict of the Hon'ble Supreme Court in Chekmate Services Pvt. Ltd. Vs. CIT (2022) 143 taxmann.com 178 (SC) dated 12.10.2022 wherein it has been held that deduction u/s 36(1)(va) in respect of delayed deposit of amount collected towards employees' contribution to PF cannot be claimed when deposited within the due date of filing of return even when read with Section 43B of the Income-tax Act, 1961. Relevant extract of the said judgment is reproduced as under: The deduction made by employers to approved provident fund schemes, is the subject matter of Section 36(1) (iv). It is noteworthy, that this provision was part of the original IT Act; it has largely remained unaltered. On the other hand, Section 36(1)(va) was specifically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h that Parliament, while introducing Section 36(1)(va) along with Section 2(24)(x), was aware of the distinction between the two types of contributions. There was a statutory classification, under the IT Act, between the two. There is no doubt that in Alom Extrusions, this court did consider the impact of deletion of second proviso to Section 43B, which mandated that unless the amount of employers' contribution was deposited with the authorities, the deduction otherwise permissible in law, would not be available. This court was of the opinion that the omission was curative, and that as long as the employer deposited the dues, before filing the return of income tax, the deduction was available. A reading of the judgment in Alom Extrusions, would reveal that this court, did not consider Sections 2(24)(x) and 36(1)(va). Furthermore, the separate provisions in Section 36(1) for employers' contribution and employees' contribution, too went unnoticed. When Parliament introduced Section 43B, what was on the statute book, was only employer's contribution (Section 36(1)(iv)). At that point in time, there was no question of employee's contribution being considered as part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed only on book entries, would not be given. To pass muster, actual payments were a necessary pre-condition for allowing the expenditure. The distinction between an employer's contribution which is its primary liability under law in terms of Section 36(1)(iv), and its liability to deposit amounts received by it or deducted by it (Section 36(1)(va)) is, thus crucial. The former forms part of the employers' income, and the later retains its character as an income (albeit deemed), by virtue of Section 2(24)(x) - unless the conditions spelt by Explanation to Section 36(1)(va) are satisfied i.e., depositing such amount received or deducted from the employee on or before the due date. In other words, there is a marked distinction between the nature and character of the two amounts the employer's liability is to be paid out of its income whereas the second is deemed an income, by definition, since it is the deduction from the employees' income and held in trust by the employer. This marked distinction has to be borne while interpreting the obligation of every assessee under Section 43B. The non-obstante clause in section 43B would not in any manner dilute or override the e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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