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TMI Blog2024 (1) TMI 1330X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the Tribunals. In the present case, the Hon'ble Supreme Court once has categorically held that the assessee is only entitled to the rebate/deduction u/s 43B of the Act, if the amount had been paid on or before the due date as provided by the parent Act of ESI/PF. Once the issue has been decided by the Apex Court, then the decision given by the Tribunal in assessee s own case loses its significance and is no more biding on the Tribunal being contrary to the law laid down by the Hon'ble Supreme Court. Decided against assessee. - SHRI R.K. PANDA, VICE-PRESIDENT AND SHRI LALIET KUMAR, JUDICIAL MEMBER For the Assessee: Shri A. Srinivas, CA For the Revenue: Smt. Sheetal Sarin, DR ORDER Per Laliet Kumar, J.M This appeal filed by the assessee is directed against the order dated 6.7.2023 of the learned CIT (A)-NFAC Delhi, relating to A.Y. 2018-19 regarding disallowance of late payment of PF ESI. 2. The learned AR submitted that the issue is covered in favour of the assessee by the decision of the Tribunal passed in the case of the assessee for the A.Y 2019-20 and drew our attention to Para 4, 5 6 of the said order which reads as under: 4. At the outset, We find the issue is set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. Though section 43B of the Act covers only employer's contribution and does not cover employee contribution, some courts have applied the provision of section 438 on employee contribution as well. There is distinction between employer contribution and employee's contribution towards welfare fund. It may be noted that employee's contribution towards welfare funds is a mechanism to ensure the compliance by the employers of the labour welfare laws. Hence, it needs to be stressed that the employer's contribution towards welfare funds Such as ESI and PF needs to be clearly distinguished from the employee's contribution towards welfare funds. Employee's contribution is employee own money and the employer deposits this contribution on behalf of the employee in fiduciary capacity. By late deposit of employee contribution, the employers get unjustly enriched by keeping the money belonging to the employees. Clause (va) of sub-section (1) of Section 36 of the Act was inserted to the Act vide Finance Act 1987 as a measure of penalizing employers who mis-utilize employee's contributions. Accordingly, in order to provide certainty, it is proposed to (i). amend cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for filing of return under the relevant section of the provident fund Act. A bare reading of section 36(1)(va) makes it clear that deduction is available only if such sum is credited by the employer to the employees account in the relevant fund or funds on or before the due date. The due date as per Explanation to the section 36(1)(va) means the date by which the assessee is required as a employer to credit an employees contribution to the employee's account in the relevant fund under any Act, Rule, Order or Notification issued there under. The relevant sections are reproduced for clarity. Any sum received by the assesses from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the due date. Explanation- For the purposes of this clause, due date means the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued there-under or under any standing order, award, contract of service or oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to which provisions of sub-clause (x) of clause (24) of section 2 applies. The rationale of the amendment was explained by the memorandum to the Finance Bill 2021 as below:- There is a distinction between employer contribution and employee's contribution towards welfare fund. It may be noted that employee's contribution towards welfare funds is a mechanism to ensure the compliance by the employers of the labour welfare laws. Hence, it needs to be stressed that the employer's contribution towards welfare funds such as ESI and PF needs to be clearly distinguished from the employee's contribution towards welfare funds. Employee's contribution is employee own money and the employer deposits this contribution on behalf of the employee in fiduciary capacity. By late deposit of employee contribution, the employers get unjustly enriched by keeping the money belonging to the employees. Clause (va) of sub-section (1) of section 36 of the Act was inserted to the Act vide Finance Act 1987 as a measure of penalizing employers who miss utilize employee's contributions . From the above amendment, it is seen that the law is now clear i.e., employees contribution to specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts which are held in trust, as it is in the case of employees contributions-which are deducted from their income. They are not part of the assessee employer's income, nor are they heads of deduction per se in the form of statutory pay out. They are others income, monies, only deemed to be income, with the object of ensuring that they are paid within the due date specified in the particular law. They have to be deposited in terms of such welfare enactments. It is upon deposit, in terms of those enactments and on or before the due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated as a deduction. Thus, it is an essential condition for the deduction that such amounts are deposited on or before the due date. If such interpretation were to be adopted, the non-obstante clause under Section 438 or anything contained in that provision would not absolve the assessee from its liability to deposit the employee's contribution on or before the due date as a condition for deduction. Thus, the Hon'ble Supreme Court of India in its judgment held that the due dates mentioned in 43B on the deemed income held in trust have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase in additional staff costs and filing of Form 10DA would be necessary only if there is increase in additional staff costs. It is also seen from the submissions filed by the appellant that deduction of like amount had been granted for the Assessment Year 2019-20 also, the same being the third and final year for availing such deduction. In view of the above, the claim of the appellant under section 80JJAA is allowable and is therefore allowed. In result the Appeal is Partly Allowed , 4. The learned DR submitted that the decision of the learned CIT (A) was based on the decision of the Hon'ble Supreme Court rendered in the case of Checkmate Services (P) Ltd vs. CIT in appeal No.2383 of 2016 dated 12.10.2022. It was submitted that the decision given earlier by the Tribunal in the case of the assessee was much prior to the decision by the Hon'ble Supreme Court on 12.10.2022. 5. In rebuttal, the learned AR submitted that the decision given by the Tribunal in the case of the assessee should be applied as it is binding on the Tribunal. 6. We have heard the rival arguments made by both the sides and perused the available material on record. Undoubtedly in the present case, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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