SHRI. M.KRISHNAMURTHY,BANGALORE vs. INCOME-TAX OFFICER, WARD-6(3)(1), BANGALORE

This appeal filed by the assessee is against the order passed by the NFAC, New Delhi vide order DIN - ITBA/NFAC/S/250/2022- 23/1050041632(1) dated 23/02/2023 u/s 250 of the Income-tax Act for the assessment year 2018-19 for dismissing the appeal of the assessee by observing that the assessee did not pay the employee’s contribution to PF/ESI within the due date as per the respective Act and confirming the order passed by the AO relying on the judgment of the Hon’ble Supreme Court in the case of Checkmate Pvt. Ltd. Vs. CIT in Civil Appeal No.2833 of 2016.

The ld.AR of the assessee submitted that the CPC as well as the ld.CIT(A) has not accepted the expenditure claimed towards payment of PF/ESI deposited before filing of the income-tax return as per sec.43B of the Act and he further submitted that salary due was paid in the following month and the PF & ESI contribution were deposited immediately within the same month/following month in which employees contribution were received, e.g., the salary for the month of April was paid in May i.e., following month , accordingly the employees contribution towards PF & ESI were received by the assessee in the month of May and therefore the due date for deposit of employees PF/ESI contribution is June, 15th. Unless the employees contribution is not received from the employees, the assessee cannot make payment to the respective funds towards employees contribution. In support of his argument, he relied on the Tribunal decision in the case of the M/s MTR Maiya’s in vide order dated 27/4/2023. Therefore, he requested that the matter may be sent back to the AO for the verification of the actual date of payment of salary and due date of the payment of employees’ contribution towards PF and ESI as per sec.36(1)((va) r.w.s 2(24)(x) of the Act.

The ld.DR relied on the order of the lower authorities and submitted that the Hon’ble Supreme settled this issue in the case of Checkmate Services (supra) relied on by the ld.CIT(A).

After hearing rival contention and facts submitted by the ld.AR, we note that the CPC has disallowed the employees contribution as per 36(1)(va) r.w.s 2(24)(x) of the Act. On going through order of the CIT(A), the details of the disallowance have been quoted in his order at page No.6 to 8 of its order and in the table due date and date of amount paid has been mentioned. We note that there is a delay in remitting the employees’ contribution as per the respective Act reported in Form 3CD. However, the ld.AR of the assessee submitted that the due salary for the month of April has been paid in the month of May, due date for payment of employees contribution should have be considered as 15th June. Accordingly, we note that details as per Form No.3CD and submissions made during the course of hearing are not matching which requires examination. Considering the judgment relied by the ld.AR in the case of MTR Maiya’s (supra), we are remanding this issue to the file of the AO for the verification of the actual date of payment of salary and the due date for remitting the employees’ PF and ESI contribution in the light of the decision cited supra and the judgment of Hon’ble Supreme Court in Checkmate Pvt. Ltd. (supra). The assessee is directed to produce necessary documents in support of its claim and the AO is directed to give three effective opportunities of being heard and to decide the issue as per law.