WANBURY LIMITED,MUMBAI vs. ASSISTANT DIRECTOR OF INCOME TAX, CENTRAL PROCESSING CENTRE , BENGALURU

This is an appeal preferred by the assesseecompany against the order of the Commissioner of Income Tax (Appeals)/NFAC dated 16.11.2020 for AY 2019-20.

The main grievance to the assessee is against the action of the CPC making adjustment/disallowance u/s 36(1)(va) of the Income Tax Act, 1961[hereinafter the Act] to the tune of Rs. 3,29,22,239/-on account of late deposit of Employees’ Contribution to ESIC and PF, while passing intimation u/s 143(1) of the Act.

Brief facts are that assessee company for AY 2009-10 filed return on 31-10-2019 declaring total loss of Rs. 11,13,89,199/-. Subsequently, the assessee’s return of income was processed by CPC; and assessee received intimation u/s 143(1) of the Act dated 27.03.2022, wherein CPC disallowed u/s 36(1)(va) of the Act, Rs. 3,29,22,239/-on account of late deposit of Employees’ Contribution to ESIC and PF and thus loss of the assessee company was re-computed at Rs. 7,84,66,819/-. Being aggrieved, assessee preferred appeal before Ld. CIT(A) and raised grounds/issue regarding disallowance of Rs. 3,29,22,389/- u/s 36(1)(va) of the Act which was dismissed. Aggrieved by the action of Ld. CIT(A)/NFAC, the assessee is before us.

The main grievance, of the assessee is that from a perusal of page no 7 of the impugned intimation order it can be seen that an amount of Rs 3,29,22,389/- was disallowed u/s 36(1) (va) of the Act u/s 143(1)(A)(vi) of the Act which action of the CPC was wrong because it could have been done by the CPC only u/s143(1)(A)(ii) of the Act. Therefore, the adjustmentmade by CPC is per-se wrong.

However, we do not agree with the aforesaid contention of the Ld. AR of the assessee because it is well settled that mention or application of a wrong provision of law to a given facts of case itself does not make the authority incompetent to deal with the factual situation unless there is no provision, which can take care of the jurisdictional fact [Refer Hazari Md 41 ITR 12 Supreme Court] Further we note that the Hon’ble Supreme Court in the case of M/s. 6.. Checkmate Services Pvt. Ltd. Vs. CIT in Civil Appeal No. 2833 of 2016 dated 12.10.2022 has held that the late deposit of Employees’ Contribution in respect of PF/ESIC as prescribed under the respective Acts (PF/ESIC) would attract disallowance u/s 36(1)(va) of the Act; and therefore, we are inclined to dismiss the appeal of the assessee. And the CPC/AO was empowered to disallow the deduction claimed by assessee regarding Employee’s Contribution u/s 143(1)(A)(ii) of the Act, if the remittance was made in the relevant funds after the due-date prescribed under the PF/ESIC Act. In the result, appeal of the assessee is dismissed.