SWASTIK TOTAL SERVICES PRIVATE LIMITED,MUMBAI SUBARBAN vs. CIT APPEAL, MUMBAI

In this case the fact shows that assessee has deposited the provident fund dues collected from the employees’ amounting to ₹ 2,647,335/– and deposited the same not within the due date prescribed under the Provident Fund Act or ESIC Act but before the due date of filing of return of income.

Therefore, only question involved in both these appeal is whether the amount of employees’ contribution towards the provident fund and ESIC paid by the assessee beyond the due date prescribed under the respective Provident Fund Act or ESIC Act but before the due date of filing of the return of income is disallowable under section 36 (1) (va) of the Act. Admittedly, the assessee has deposited the above dues before the due date of filing of the return of income.

Against this order the assessee preferred an appeal before the learned CIT – A who dismissed the appeal of the assessee. Consequently, the appeals were filed before the coordinate bench wherein the appeals of the assessee were allowed as per order dated 18th May, 2022.

The learned authorized representative submitted a short note. It was stated that decision of the honorable Supreme Court in case of Checkmate Services Private Limited Vs. CIT [2022] 143 taxmann.com 178 (SC) was rendered on 12th October, 2022 after the order passed by the Tribunal in the case of the appellant. This matter had attained finality as the revenue did not prefer any appeal before the honorable Bombay High Court against the order of the tribunal dated 18th May, 2022. One of the argument before the tribunal was that no such adjustment could have been made under section 143 (1) (a) of the Act. Even on the merits of the case the learned authorized representative submitted that the issue is squarely covered in favor of the assessee at the time when the order was passed. Those two decisions of the honorable Bombay High Court in case of CIT Vs. Hindustan Organics Chemicals Ltd 366 ITR 1 and CIT Vs. Ghatge Patil Transports Ltd 368 ITR 749 were not reversed by the Supreme Court. It was further stated that as the decision of the honorable Supreme Court in case of Checkmate Services Private Limited (supra) was rendered purely in the context of merits of section 36 (1) (va) of the Act, the issue still arose whether in any case the disallowance of such payment was within the power under section 143 (1)

The learned Departmental Representative vehemently supported the orders of the learned CIT (A) submitted that when in the tax audit report the assessee has indicated that this amount is disallowable and same has not been considered while computing the total income while filing the return of income, the adjustment has been made by the Central Processing Centre under section 143 (1) (a) (iv) of the Act. Before making the adjustment the proviso of that section was looked into an assessee was given an opportunity and thereafter the disallowance was made. Now, the disallowance has been squarely covered in favour of the revenue by the decision of the honorable Supreme Court in case of checkmate services private limited[supra]. The decision of the coordinate bench of Jaipur does not apply to the facts of the case because it is erroneously decided ignoring the binding decision of the honorable Supreme Court. It was further stated that the decision of the honorable Bombay High Court in case of Hindustan Organics Chemicals Ltd (supra) and CIT Vs. Ghathge Patil transport private limited[ supra] have been expressly overruled by the honorable Supreme Court. It is

We have carefully considered the rival contentions and perused the orders of the lower authorities. In this case the only issue that is involved is whether the employees’ contribution paid by the assessee/deposited by the assessee beyond the due date prescribed under section 38 of the Provident Fund Act and respective other Act is allowable as deduction to the assessee or not. According to the provisions of section 36 (1) (iv) any sum paid by the assessee as an employer by way of contribution towards a recognized provident fund or an superannuation fund which is received by employer from its employees to which the provisions of sub clause (x) of clause 24 of section 2 apply, is allowable as deduction while computing income from profits and gains of business , only if such sum is credited by the assessee to the employees’ account and the relevant fund or funds on or before the due date. The explanation 1 defines the ‘due date’ means the date by which the assessee is required as an employer to credit employees contribution to the employees account in the relevant fund under any Act, Rule, order or notification issued there under or under a standing order or otherwise. In the present case admittedly in the tax audit report itself

Further, now the issue is squarely covered against the assessee by the decision of the honorable Supreme Court in case of Checkmate Services (P.) Ltd. (supra). Accordingly, we do not find any infirmity in the order of the learned CIT (A) in confirming the disallowance under section 36 (1) (va) of the Act as deposit of the

Various decision cited by the assessee is challenging on the merits of the addition if it has been made u/s 143 (1) (a) (ii) of the act, holding it to be an incorrect claim. This is not the case here the adjustment is u/s 143 (1) (a) (iv) of The Act. Further there is no denial from the assessee that in para no 20 (b) of Form no 3CD such information was not available. Thus, the judicial precedents relied up on does not support the case of assessee.

In the result, all the grounds of the appeal filed by the assessee are dismissed.

The facts relating to the A.Y. 2019-20 also identical. Accordingly, the appeal for Assessment Year. 2018-20 is also dismissed.

In the result both the appeals filed by the assessee are dismissed.