AIRCON ENGINEERS PRIVATE LIMITED,NEW DELHI vs. ACIT CIRCLE-1(2), NEW DELHI

(Appellant) (Respondent) Assessee by : None Revenue by : Shri Kanav Bali, Sr. DR Date of Hearing : 08.02.2023 Date of Pronouncement : 15.02.2023 ORDER

This appeal filed by the assessee is directed against the order dated 28.08.2020 of the CIT(A)-1, New Delhi, relating to Assessment Year 2018-19.

“1. That the order of the Learned Commissioner of Income-tax (Appeals) is against facts and law. 2. That there is no justification to add Rs.21,00,593/- to the returned income on account of Employee share of Provident Fund & ESI under section 36 (l)(v) as it is not within the preview of the section 143 (1) of the Income- tax Act, 1961

3. That there is no justification to make the above said addition of Rs.21,00,593/- to income on account of Employee share of Provident Fund and ESI as the payments have been made before the due date of filing the return of income under section 139(1). It is prayed that the Appellant may be permitted to add, to alter or to withdraw any of the grounds at the time of hearing.”

"In the opinion of this Court, the reasoning in the impugned judgment that the non-obstante clause would not in any manner dilute or override the employer's obligation to deposit the amounts retained by it or deducted by it from the employee's income, unless the condition that it is deposited on or before the due date, is correct and justified. The non-obstante clause has to be understood in the context of the entire provision of Section 43 B which is to ensure timely payment before the returns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interest payment and other statutory liability. In the case of these liabilities, what constitutes the due date is defined by the statute. Nevertheless, the assessees are given some leeway in that as long as deposits 3 are made beyond the due date, but before the date of filing the return, the deduction is allowed. That, however, cannot apply in the case of amounts 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 43 B 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."