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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM & MS. KAVITHA RAJAGOPAL, JM
O R D E R Per Kavitha Rajagopal, J M:
This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) (‘ld.CIT(A) for short), National Faceless Appeal Centre (‘NFAC’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2021-22.
The assessee has challenged the disallowance of Rs.16,64,399/- u/s. 36(1)(va) r.w.s. 2(24)(x) of the Act towards delayed payment of employee’s contribution to PF.
The brief facts of the case are that the assessee is an individual and is into the business of providing health services like Sanitization, Fumigation to various
(A.Y. 2021-22) Madhuri Sunil Zode vs. ADIT Government Organization like NMMC, JNPT, BPCL, Banks, etc. The assessee filed her return of income dated 18.01.2022, declaring total income at Rs.33,55,070/-. It is observed that the Assessing Officer (A.O. for short)/CPC u/s. 143(1) of the Act assessed the income of the assessee at Rs.50,14,467/- by making a disallowance u/s. 36(1)(va) of the Act amounting to Rs.16,64,399/- towards employee’s contribution towards PF and ESIC which was paid belatedly after the due date prescribed under the relevant Act but, before the due date of the filing of the return u/s. 139(1) of the Act along with the other disallowances.
The assessee was in appeal before the ld. CIT(A) challenging the impugned addition.
The ld. CIT(A) upheld the disallowance made by the A.O./CPC.
The assessee is in appeal before us, challenging the impugned disallowance of Rs.16,64,399/- on account of belated payment of employee’s contribution towards PF & ESI. The learned Authorised Representative (ld. AR for short) for the assessee contended that during the Covid Protocol, the assessee and her employees were providing life saving services to the Government Organization for which payment of salary and other dues were not paid on time. The ld. AR further stated that the assessee had to pay the salary out of her own savings and investment and for various other reasons, the employee’s contribution towards PF & ESIC was said to be delayed by 10 to 15 days. The ld.AR for the assessee relied on the decision of the Tribunal of Calcutta Bench in the case of Kanoi Paper & Industries Ltd. vs. ACIT [2002] 75 TTJ 448 (Cal).
(A.Y. 2021-22) Madhuri Sunil Zode vs. ADIT 7. The learned Departmental Representative (ld. DR for short) for the Revenue, on the other hand, controverted the said fact and stated that this issue was covered by the Hon'ble Apex Court in the case of Checkmate Services (P.) Ltd. vs. CIT [2002] 143 taxmann.com 178 (SC) which was in favour of the Revenue.
We have heard the rival submissions and perused the materials available on record. It is evident that this issue has no longer res integra and the same has been covered by the decision of the Hon'ble Apex Court in the case of Checkmate Services (P.)
Ltd. (supra). As this issue was recurring in various cases, the Hon'ble Apex Court vide its order dated 12.10.2022 has settled this dispute where there was varied decisions by the Hon’ble High Courts, some of it favouring the assessee and some in favour of the Revenue. The Hon'ble Apex Court has taken a view that belated payment by the employer towards employee’s contribution to PF and ESI beyond the due date specified under the relevant Acts though paid before filing of the returns, is not an allowable deduction. The Hon'ble Apex Court has also held that the employee’s contribution towards PF and ESIC will not come under the purview of section 43B of the Act which was only towards employer’s contribution. It is pertinent to point out that the decision cited by the ld. AR in the case of Kanoi Paper & Industries Ltd. (supra) was much before the decision of the Hon'ble Apex Court in the case of Checkmate Services (P.) Ltd. (supra). Further the decision of Kanoi Paper & Industries Ltd. (supra) is no longer good law in view of the facts that issue that ‘whether the period of 15 days to be counted from the date of payment or the date for which wages or salary is disbursed has already been decided by Hon’ble Gujarat High Court in case of Ask Me Lab Con Services Ltd. 2019
(A.Y. 2021-22) Madhuri Sunil Zode vs. ADIT SCC OnLine Guj 1094 where after considering section 38 of the Provident Fund Act, it was held that the expression “within 15 days of close of every month” therefore must be interpreted as having reference to close of the month, for which, the wages are required to be paid. Such is also the decision of Hon’ble Madras High Court in case of CIT vs. Madras Radiators and Pressings 264 ITR 620. Therefore, we hold that fifteen days period is to be counted from the last day of the month and date of payment of wages are irrelevant. The ld. CIT(A) has upheld the disallowance by relying on the decision of the Hon'ble Supreme Court in the case of Checkmate Services (P.) Ltd. (supra) and, hence, we find no infirmity in the order of the ld. CIT(A). Therefore, we find no merit in the submission of the assessee.
In the result, the appeal filed by the assessee is dismissed.
Order pronounced in the open court on 07.06.2023.