HIMANSHU SHUKLA,RUDRAPUR vs. THE ASSISTANT DIRECTOR OF INCOME TAX , BANGALORE

This appeal by the Assessee arises out of the order of the

Learned Commissioner of Income Tax (Appeals), National Faceless

Appeal Centre (NFAC), Delhi, [hereinafter referred to as ‘Ld. CIT(A)’,

in short] in DIN & Order No. ITBA/NFAC/S/250/2021-

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22/1034537493(1) dated 30/07/2021 against the order of

assessment passed u/s 154 of the Income-tax Act, 1961

(hereinafter referred to as ‘the Act’) dated 08/06/2020 by the ld.

Asst. Director of Income Tax, CPC (hereinafter referred to as ‘Ld.

AO’).

already settled by the decision of the Hon’ble Supreme Court, we

proceed to dispose of this appeal on hearing the Ld. DR and based

on materials available on record.

ld. CIT(A) was justified in confirming the disallowance made on

account of employee’s contribution to Provident Fund and Employee

State Insurance in the facts and circumstances of the instant case.

available on record. This issue is no longer res integra in view of the

decision of the Hon’ble Supreme court in the case of Checkmate

Services Pvt. Ltd vs CIT reported in 448 ITR 518. It is not in

dispute that the employees contribution to PF and ESI were

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deposited by the assessee to the Government account beyond the

due dates prescribed under the respective acts but well before the

due date of filing of return of income u/s. 139(1) of the Act. We find

that the recent decision of the Hon’ble Supreme Court had settled

the entire dispute to rest by deciding it in favour of the Revenue by

observing as under:- “53. The distinction between an employer's contribution which is its primary liability under law - in terms of section 36(1)(iv), and its liability to deposit amounts received by it or deducted by it (Section 36(1)(va)) is, thus crucial. The former forms part of the employers' income, and the later retains its character as an income (albeit deemed), by virtue of section 2(24)(x) - unless the conditions spelt by Explanation to section 36(1)(va) are satisfied i.e., depositing such amount received or deducted from the employee on or before the due date. In other words, there is a marked distinction between the nature and character of the two amounts - the employer's liability is to be paid out of its income whereas the second is deemed an income, by definition, since it is the deduction from the employees' income and held in trust by the employer. This marked distinction has to be borne while interpreting the obligation of every assessee under section 43B. 54. In the opinion of this Court, the reasoning in the impugned judgment that the non- obstante clause would not in any manner dilute or override the employer's obligation to deposit the amounts retained by it or deducted by it from the employee's income, unless the condition that it is deposited on or before the due date, is correct and justified. The non-obstante clause has to be understood in the context of the entire provision of Section 43B which is to ensure timely payment before the returns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interest payment and other statutory liability. In the case of these liabilities, what constitutes the due date is defined by the statute. Nevertheless, the assessees are given some leeway in that as long as deposits are made beyond the due date, but before the date of filing the return, the deduction is allowed. That, however, cannot apply in the case of amounts which are held in trust, as it is in the case of employees' contributions- which are deducted from their income. They are not part of the assessee employer's income, nor are they heads of deduction per se in the form of statutory pay out. They are others' income, monies, only deemed to be income, with the object of ensuring that they are paid within the due date specified in the particular law. They have to be deposited in terms of such welfare enactments. It is upon deposit, in terms of those enactments and on or before the due

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dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated as a deduction. Thus, it is an essential condition for the deduction that such amounts are deposited on or before the due date. If such interpretation were to be adopted, the non-obstante clause under section 43B or anything contained in that provision would not absolve the assessee from its liability to deposit the employee's contribution on or before the due date as a condition for deduction. 55. In the light of the above reasoning, this court is of the opinion that there is no infirmity in the approach of the impugned judgment. The decisions of the other High Courts, holding to the contrary, do not lay down the correct law. For these reasons, this court does not find any reason to interfere with the impugned judgment. The appeals are accordingly dismissed.”

the claim of deduction towards employee’s contribution to PF & ESI

made by the assessee becomes an incorrect claim warranting primafacie

adjustment u/s.143(1) of the Act.

decision of the Hon’ble Supreme Court referred to supra, the grounds

raised by the assessee are hereby dismissed.

Order pronounced in the open court on 17th August, 2023.

Sd/- Sd/-/- (SAKTIJIT DEY) (M. BALAGANESH) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 17/08/2023 PK/Ps

5 ITA No.30/Ddn/2021 Himanshu Shukla vs. ADIT