PR. COMMISSIONER OF INCOME TAX-7 vs. PEPSICO INDIA HOLDING PVT. LTD.

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ITA - 12 / 2023HC Delhi12 January 20235 pages
For Petitioner: PUNEET RAI
AI SummaryPartly Allowed

What did the High Court hold?

The High Court held that the Supreme Court's decision in Checkmate Services P Ltd. mandates that late deposits of employee contributions are not allowable deductions. However, it acknowledged a separate issue regarding a deposit made on the day after a national holiday.

What were the facts?

The assessee deposited employees' contribution to provident fund and insurance beyond the statutory due dates but before filing the income tax return. The Tribunal ruled in favour of the assessee, allowing the deduction.

What were the issues?

Whether late deposit of employee contributions to PF/ESI is allowable as a deduction, and whether a deposit made on the day after a national holiday is considered timely.

Which sections of the Income-tax Act were involved?

Section 36(1)(5)(A),Section 139(1),Section 143(1)

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$~40 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 12/2023

PR. COMMISSIONER OF INCOME TAX-7 ......Appellant

Through: Mr Puneet Rai, Sr. Standing Counsel.

versus

PEPSICO INDIA HOLDING PVT. LTD.

......Respondent Through: Mr Deepak Chopra with Mr Anmol Anand, Ms Priya Tandon and Ms Sheetal Kandpal, Advs.

CORAM:

HON'BLE MR. JUSTICE RAJIV SHAKDHER

HON'BLE MS. JUSTICE TARA VITASTA GANJU

O R D E R %

12.01.2023 [Physical Hearing/Hybrid Hearing (as per request)] CM Appl.1298/2023 1. Allowed, subject to just exceptions. CM Appl.1299/2023

2.

This is an application filed on behalf of the appellant/revenue, seeking condonation of delay in filing the appeal. 2.1 There is a delay of 32 days in filing the appeal. 3. Mr Deepak Chopra, who appears on behalf of the respondent/assessee, does not oppose the prayer made in the application. 4. Accordingly, the delay of 32 days in filing the appeal is condoned. 5. The application is, accordingly, disposed of. ITA 12/2023

1/5 This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/03/2026 at 12:33:31

ITA 12/2023 6. According to us, the following questions of law arise for consideration: (i) Whether the Income Tax Appellate Tribunal [in short, “Tribunal”] misdirected itself in law in concluding that even if employees’ contribution concerning provident fund and towards insurance was deposited beyond the date prescribed under the subject statute, it would be allowable as a deduction to the employer/assessee? (ii) Whether in the facts and circumstances of the case, the respondent/assessee could claim deduction under Section 36(1)(5)(A) of the Income Tax Act, 1961 [in short, “Act”], concerning the employees’ contribution to Provident Fund amounting to Rs. 1,56,12,404/- which was deposited on 16.08.2018, as the due date fell on a national holiday i.e., 15.08.2018? 7. The Tribunal, based on judgments which hold the field, including the judgment rendered by a Division Bench of this Court in Commissioner of Income Tax versus AIMIL Limited (2010) 321 ITR 508 (Del.) and another judgment dated 10.09.2018 delivered by this Court in ITA No.983/2018, titled PCIT vs Pro Interactive Service (India) Pvt.Ltd., ruled in favour of the respondent/assessee. 7.1 In sum, the Tribunal concluded, in line with the aforesaid judgments, that since the amounts in issue had been deposited before filing of income tax return under Section 139(1) of the Act, no disallowance could be made, although the deposits were not within the timeframe fixed under the statutes governing provident fund and insurance. ITA 12/2023

2/5 This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/03/2026 at 12:33:31

8.

Mr Puneet Rai, learned senior standing counsel, who appears on behalf of the appellant/revenue, has drawn our attention to the judgment of the Supreme Court in Checkmate Services P Ltd vs. Commissioner of Income Tax, [2022] 448 ITR 518 (SC). 8.1 A careful perusal of the said judgment shows, that the Supreme Court has taken a contra view. Therefore, the view taken by the Tribunal would have to be reversed. 9. Mr Deepak Chopra, who appears on behalf of the respondent/assessee, has drawn our attention to paragraph 7 of the impugned order dated 20.06.2022 passed by the Tribunal, which adverts to the fact that the disallowance could not be made under Section 143(1) of the Act. 9.1 Furthermore, Mr Chopra has also drawn our attention to paragraph 4.2.7 of the Commissioner of Income Tax (Appeals)’s [in short, “CIT(A)”] order dated 25.03.2022, wherein, insofar as the respondent/assessee is concerned, the details of the deposits made towards provident fund and insurance are set forth. For the sake of convenience, the said table is extracted hereafter: “Particulars Amount (INR) Due Date Date of Deposition Remarks Employees’ contribution to PF 1,56,12,404 15/08/2018 16/08/2018 Deposited on or before due date of filing the return of income under section 139(1) of the Act ie 30 November 2019” 1,54,66,976 15/10/2018 16/10/2018 1,61,75,057 15/04/2019 16/04/2019 Total 4,72,54,437

10.

Based on the aforesaid extract, Mr Chopra argues that insofar as the

ITA 12/2023

3/5 This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/03/2026 at 12:33:31

deposit of Rs.1,56,12,404/- is concerned, the same would have to be construed as being within time, since the due date fell on a national holiday i.e., 15th August, 2018 and thus, the deposit on 16.08.2018 would have been construed as being within time. 10.1 In support of his submission, Mr Chopra seeks to place reliance on Section 10 of the General Clauses Act, 1897. Mr Chopra says that this ground was also raised before the Tribunal. 11. Therefore, insofar as the first submission of Mr Chopra is concerned, which is founded on a Tribunal’s view that disallowances could not be made under Section 143(1) of the Act while processing refund, we are of the opinion that this argument cannot be sustained. The reason being that the law declared by the Supreme Court in Checkmate Services (P.) Ltd.’s case would be the law as it ought to have been when the provision was inserted. The judgment of the Supreme Court does not say it will apply prospectively, and therefore, the judicial view that prevailed when the Tribunal had pronounced its judgment,having undergone change,it can only be stated that the position of law was always as declared in Checkmate Services (P.) Ltd, and therefore, deduction could never have been claimed by the respondent/assessee while filing the return. Accordingly, the first question of law framed is allowed in favour of the appellant/revenue, and against the respondent/assessee. 11.1 However, that being said, what we need to consider, is the second submission advanced by Mr Chopra in the given facts of the case i.e., whether the deposit of Rs.1,56,12,404/- on 16.08.2018 was within time, given the fact that the due date fell on 15.08.2018. This issue relates to the ITA 12/2023

4/5 This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/03/2026 at 12:33:31

second question of law, as framed hereinabove. 12. Accordingly, issue notice confined to the second question of law. 12.1 Mr Chopra accepts notice on behalf of the respondent/assessee. 13. List the matter on 10.02.2023.

RAJIV SHAKDHER, J

TARA VITASTA GANJU, J

JANUARY 12, 2023/pmc

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ITA 12/2023

5/5

This is a digitally signed order. The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 27/03/2026 at 12:33:31

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