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Income Tax Appellate Tribunal, [ DELHI BENCH : “A” NEW DELHI ]
Before: DR. B. R. R. KUMAR & SH. YOGESH KUMAR U.S.
This appeal is filed by the assessee against the order dated 17/08/2020 passed by CIT(A)-10, New Delhi for Assessment Year 2017-18.
The grounds of appeal are as under:-
“1. That Id CIT (A) without appreciating the correct facts of the case and ignoring the crucial written submissions filed on the issue to determine the due date of deposit of provident fund under the relevant Act, is not justified in law and facts and circumstances of Aroma Aromatics & Flavors. Vs. ACIT the case in confirming the addition of Rs, 182761/- on account of deposit of employee contribution of provident fund beyond the alleged due date in the relevant Act.
2. Without prejudice to ground of appeal no. 1, Id CIT(A) without appreciating the correct facts of the case in confirming addition of employee contribution of provident fund Rs. 45921/- which was in any case otherwise was deposited on 16/08/2016 within the due date being 15/08/2016 was Independence day (national * holiday) and as per General Clause Act, next working day will be the due date.
Brief facts of the case are that the assessee filed return of income declaring an income of Rs.1,36,01,150/-. During the year under consideration, the assessee derived income under the head of “income from business and profession”. The assessment order came to be passed on 18.12.2019, by disallowing sum of Rs.1,82,761/- on the ground that the assessee is not entitled for deduction u/s 36(1)(va) of the Act due to failure on his part in depositing the employee’s contribution on or before due date. The assesse has preferred an appeal before the CIT(A) challenging the assessment order and the CIT(A) vide order dated 25.12.2019, dismissed the appeal filed by the assessee on the grounds mentioned above.
The Ld. Counsel for the assessee vehemently submitted that the CIT(A) erroneously confirmed the addition of Rs.1,82,761/-, which was deposited well within the due date in the relevant Act. Therefore, submitted that the CIT(A) has committed an error in confirming the addition made by the AO. Ld Counsel
Aroma Aromatics & Flavors. Vs. ACIT further submitted that all the payments were made within the span of 1 to 6 days from the due date and the assessee would be at liberty to make payments of contribution concerned within the 15 days from the end of the month during which disbursement of salary is actually made, the authorities cannot disallowed the same and drawn our attention to Section 36(2) and 38 of Employees Provident Fund Scheme, 1952. The Ld. Counsel for the Assessee had also relied on following orders of the Tribunal:
(i) Fluid Air (India) Ltd. vs. Deputy Commissioner of Income Tax (1997) reported in 63 ITD 182 (Mumbai); (ii) Madras Radiators & Pressings Ltd. vs. Deputy Commissioner of Income Tax (1996) reported in 59 ITD 515 (Mad.); (iii) Kanoi Paper & Industries Ltd. vs. ACIT (2002) reported in 75 TTJ 448 (Cal.). 5. Without prejudice to the above contention, the Ld. Counsel for the Assessee submitted that, in one of the deposits, though the due date was 15/08/2016 and the same was deposited on 16/08/2016, since the August 15th is the holiday, the payment made on 16th August has to treated as the payment is made on time as per General clauses Act.
On the other hand, the Ld. DR submitted that the assessee had made the actual payment after the due date, therefore, as per the recent judgment of the Apex Court in the case of Checkmate Services P. Ltd. vs. Commissioner of Income Tax in Civil Appeal No. 2833/2016 & other connected cases the Assessee’s appeal deserves to be dismissed.
Aroma Aromatics & Flavors. Vs. ACIT
We have heard the parties, perused the material on record.
During the assessment proceedings the Ld. Assessing Officer based on the details provided in para 20b of tax audit report found that the assessee had made defaults in deposit of employee’s contribution fund which are as under:
S.No. Due date for Actual date of Provident Any other fund payment payment Fund under the provision of ESI Act, 1948 1. 15.08.2016 16.08.2016 45921 2. 15.11.2016 16.11.2016 44940 3. 15.01.2017 21.01.2017 45269 4. 15.04.2017 17.04.2017 46631 Total 182761 Total 182761/-
The Ld. AO was of the opinion that clause (va) of Sec. 36(1) provides for deduction of any sum received by the assessee from any of his employees to which the provisions of section 2(24)(x) apply, if such sum is credited by the assessee to the employees account in the relevant fund or funds on or before the due date. The Explanation to clause (va) clarifies that for the purposes of this clause, ‘due date’ means 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 otherwise, accordingly, made addition of Rs.1,82,761/-.
It is now well settled law regarding delayed employee’s PF contribution payment in the hands of the assessee under the provisions of Income Tax. The Hon’ble Supreme Court in the case of Checkmate (supra) held that employers
Aroma Aromatics & Flavors. Vs. ACIT have to deposit employee’s contribution covers ESI and PF on or before due date to avail deduction u/s 36(1)(va) and 43B of the Act.
In so far as payment for due date of deposit of provident fund i.e. 15.08.2016 which was paid on the very next day i.e. 16.08.2016, considering the fact that August 15th being Independence Day and the general holiday, the payment made on the next day deserves to be treated as the payment has been done on time. Accordingly, the addition of Rs.45921/- is hereby deleted.
In so far as remaining addition of Rs.1,06,840/- is concerned by considering the above factual matrix, we deem it fit to remand the matter to the file of Assessing Officer to examine as to whether assessee is entitled for the grace period as claimed by the Assessee or not and consider the issue denovo after providing opportunity of being heard to the assessee. Ordered accordingly.
In the result, the appeal filed by the assessee is partly allowed for statistical purpose.
Order pronounced in the Open Court on : 17th March , 2023.