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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Per Amarjit Singh (AM): The present appeal filed by the assesse is directed against the order passed by NFAC, Delhi dated 08.09.2021 for A.Y. 2017-18. The assesse has raised the following grounds before us:
“1. In the circumstances and facts of our case, the Learned Commissioner of Income Tax (Appeals), NFAC has erred in law and on facts in confirming the action of Ld. DCIT, CPC in upholding disallowance of Rs.1,21,39,702/- u/s 36(1)(va) despite the fact that the said amount of Rs1,21,39,702/- comprises of two components, an amount of Rs.64,43,502/- which pertains to employer's contribution to Provident Fund/LWF and an amount of Rs.56,96,200/- which pertains to employee's contribution to Provident Fund / LWF and not considering the conclusive evidence submitted in its written submission and supporting paper book 2.. In the circumstances and facts of our case, the Learned Commissioner of Income Tax (Appeals), NFAC has erred in law and on facts in confirming the action of Ld DCIT, CPC in upholding disallowance of Rs. 56,96,200/-
P a g e | 2 M/s Geekay Securities Services Pvt. Ltd. Vs. Dy.CIT, Circle-3(1)(1) u/s 36(1)(va) in respect of employee's contribution to Provident Fund & Labour Welfare Fund in contradiction to our own decision of the Mumbai High Court and without observing the principles of natural justice and without appreciating the facts and circumstances of the case.
In the circumstances and facts of our case, the Learned Commissioner of Income Tax (Appeals), NFAC has erred in law and on facts in confirming the action of Ld. DCIT, CPC in upholding disallowance of Rs. 64,43,502/- u/s 36(1)(va) in respect of employer's contribution to Provident Fund & Labour Welfare Fund in contradiction to the explicit provision of section 438 and without observing the principles of natural justice and without appreciating the facts and circumstances of the case
In the circumstances and facts of our case, the Learned Commissioner of Income Tax (Appeals), NFAC has erred in law and on facts in disregarding the decisions of juri ictional Courts which is binding upon him.
In the circumstances and facts of our case, the Learned Commissioner of Income Tax (Appeals), NFAC ought to have deleted the disallowance in the light of law decided by the juri ictional and binding decision of Hon'ble Bombay High Court on similar issue passed in Assessee's own case under Writ Petition No. 1984 of 2018 dated 07/12/2018 for the Asst. Year 2015-16
Without prejudice to the above grounds of appeal, in the circumstances and facts of our case, the Learned Commissioner of Income Tax (Appeals), NFAC has erred to rely on amendment to Finance Act, 2021 and considering the same to apply retrospectively which is in direct contravention of the law since the amendment to section 36(1)(va) and section 438 are applicable w.e.f. 01/04/2021 and the Learned Commissioner of Income Tax (Appeals), NFAC has erred not to consider the insertion of explanation to section 36(1)(va) and section 43B under Finance Act, 2021 as clarificatory in nature and the law to be applied retrospectively.
The appellant crave leave to add, delete or substantiate any grounds of appeal at the time of hearing.”
The fact in brief that appeal filed by the assesse was adjudicated vide ITA No.1842/Mum/2021 on 25.04.2022. Vide the aforesaid order the claim of the assesse with respect to deduction pertaining to the amount deposited towards employee’s contribution to PF/ESIC beyond the due date for payment was allowed after following the decision of ITAT, Banglore in the case of M/s BI-Worldwide India Pvt. Ltd. Vs. DCIT vide ITA No. 433/Bang/2021 dated 04.01.2022 and decision of ITAT
P a g e | 3 M/s Geekay Securities Services Pvt. Ltd. Vs. Dy.CIT, Circle-3(1)(1) 293/Hyd/2021 dated 23.08.2021. 2. Subsequently, the revenue vide miscellaneous application no. 406/Mum/2022 has requested for restoration of appeal on the basis of the decision of Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. Vs. CIT-1 Civil appeal no. 2833 of 2016 and others dated 12.10.2022 wherein it is held that no deduction is allowable for delayed deposit of employees contribution to PF/ESIC u/s 36(1)(va) of the Act. The ITAT vide order dated 15.03.2023 has recalled the impugned order dated 25.04.2022 in view of the decision of Hon’ble Counsel contended that the disallowance u/s 36(1)(va) amounting to Rs.1,21,39,702/- was consisted on two components as under: “Rs.64,43,502/- pertains to Employer’s contribution to Provident Fund/Labour Welfare Fund and Rs.56,96,200/- pertains to Employee’s contribution to Provident Fund/ Labour Welfare Fund.” The ld. Counsel further submitted that the disallowance of Rs.64,43,502/- pertained to employer contribution to provident fund which is required to be allowed u/s 43B since the payment is made before the due date of filing of return of income. The ld. Counsel also submitted that contribution of employees PF for the month of April, 2016 of Rs.2,58,360/- was paid on 16.05.2016 because due date for payment i.e 15.05.2016 was a Sunday being public holiday. Therefore, the assesse has paid this contribution of Rs.2,58,360/- on 16.05.2016 on next working day after a public holiday. Therefore, the same shall be deemed to be paid within the due date as per Sec.10 of general clause
P a g e | 4 M/s Geekay Securities Services Pvt. Ltd. Vs. Dy.CIT, Circle-3(1)(1) Act 1897. The ld. Counsel also taken a plea that such adjustment should not be made u/s 143(1) of the Act. On the other hand, the ld. D.R vehemently relied on the decision of Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. vs. CIT as supra and submitted that now it is settled law that if the employer did not deposit the amount towards employee’ s contribution on or before the due date as prescribed under the EPF/ESI the assessee is not entitled to the deduction. The ld. D.R also referred Sec. 143(1)(a)(iv) which provide that total income or loss shall be computed after making the adjustment of that disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return of income.
Heard both the sides and perused the material on record. It is undisputed fact that assessee had deposited amount of employees contribution towards EPF and ESI to the Government account beyond the due date as prescribed in the EPF Act and the ESI Act but before the due date of filing Income Tax return. The assessee has referred the decision of Hon’ble juri ictional High Court in the case of Ghatge Patil Transport Ltd. (2015) 53 taxmann.com 141 (Bombay), CIT Vs. Hindustan Organics Chemical Ltd. (2014) 48 taxmann.com 421 (Bom) and the decision of other High Court’s and ITAT’s in the paper book filed before us. We consider that the cases referred by the assesse are of no held in view of the judgment of the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. vs. CIT as supra. In this decision, the Hon’ble Supreme Court held that it is an essential condition for the deduction that such amounts are deposited within the due date specified in the particular law. If the employer did not deposit the amount towards employee’s contribution on or before the due date as prescribed under the EPF/ESIC Act, the assesse was not entitled to the P a g e | 5 M/s Geekay Securities Services Pvt. Ltd. Vs. Dy.CIT, Circle-3(1)(1) deduction. Therefore, we consider that the decision of Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. vs. CIT as supra has set rest the entire controversy wherein it is held that employer have to deposit employee’s contribution towards EPF/ESIC on or before the due date for availing deduction. Therefore, following the decision of Hon’ble Supreme Court as supra we restore this issue to the file of the assessing officer for deciding a fresh in accordance with the decision of Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. Vs. CIT-1 Civil appeal no. 2833 of 2016 and others dated 12.10.2022. We also direct the A.O to consider the plea of the assessee after verification of relevant material about its claim that the amount of Rs.64,43,502/- included in the disallowance was related to the employer’s contributions subject to depositing the same in the Govt. account before the due date of filing of the return of income. The A.O is also directed to examine the claim of payment of employee’s contribution to PF of Rs.2,58,360/-on 16.05.2016 as against due date i.e 15.05.2016 which was a Sunday being public holiday in accordance with law. Therefore, the appeal of the assessee is allowed for statistical purposes.
In the result, the appeal of the assesse is allowed for statistical purposes. Order pronounced in the open court on 17.04.2023 (Vikas Awasthy) (Amarjit Singh) Judicial Member Accountant Member Place: Mumbai Date 17.04.2023 Rohit: PS
P a g e | 6 M/s Geekay Securities Services Pvt. Ltd. Vs. Dy.CIT, Circle-3(1)(1)
आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant 2. प्रत्यथी / The Respondent. आयकर आयुक्त / CIT 3. 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file.
सत्यावपि प्रवि //// आदेशानुसार/ BY ORDER,
उि/सहायक िंजीकार (Dy./Asstt.