SWARAJ EXCELLENT MANPOWER FACILITIES P LTD,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE, 10, PUNE

PDF · subscribers
ITA 87/PUN/2022Status: DisposedITAT Pune24 November 2022AY 2017-184 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The tribunal held that employee's contribution to provident fund must be deposited before the due date specified in the respective statute for it to be allowed as a deduction. Since the assessee admitted to depositing the amount late, the disallowance was justified.

What were the facts?

The assessee's appeal concerns the disallowance of Rs. 47,48,973/- representing employee's contribution to provident fund. This disallowance was made because the contribution was deposited beyond the due dates specified under the PF Act.

What were the issues?

Whether employee's contribution to provident fund, deposited after the statutory due date but before the due date of filing the return, is allowable as a deduction. Whether the amendment to Section 36(1)(va) by the Finance Act, 2021 is retrospective or prospective.

Which sections of the Income-tax Act were involved?

Section 36(1)(va),Section 43B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCHES “B” :: PUNE

Before: SHRI S.S.GODARA & DR. DIPAK P. RIPOTE

For Respondent: Shri M.G.Jasnani – DR
Hearing: 21/11/2022Pronounced: 24/11/2022

ORDER

PER DR. DIPAK P. RIPOTE, AM:

1.

This is an appeal filed by the Assessee against the order of the ld.Commissioner of Income Tax(Appeal)[NFAC], Delhi dated 01.12.2021 emanating from the order of the Assessing Officer under section 143(3) dated 26.12.2019. The grounds of appeal by the assessee are as under : “1] The learned CIT(A) has erred in confirming the disallowance of Rs.47,48,973/- u/s 36(1 )(va) or account of employee’s contribution to provident fund on the ground that there was a delay in depositing the dues within the time limit specified under the PF Act.

A.Y. 2017-18 Swaraj Excellent Manpower Facilities P. Ltd., [A] 2] The learned CIT(A) erred in holding that the amendment made by the Finance Act,2021 to section u/s 36(1)(va) is retrospective in nature and therefore, the learned A.O. was justified in disallowing an amount of Rs.47,48,973/- u/s 36(1)(va) of the Act.

3] The learned CIT(A) erred in not appreciating that the amendment to section 36(1)(va) by Finance Act, 2021 is prospective in nature and not applicable to the year under consideration hence, there was no reason to disallow the amount u/s 36(1)(va).

4] The learned CIT(A) failed to appreciate that the assessee had deposited the amount payable under the PF Act within the due date of filing the return u/s.139(1) and hence, no disallowance u/s 36(1)(va) could be made.

5] The learned C1T(A) failed to appreciate that the provisions of section 43B are applicable to employer’s as well as employee’s contribution to PF and since the assessee had paid the amount within the due date of filing the return, no disallowance u/s 36(1 )(va) was warranted.”

No one appeared on behalf of the assessee. Ld.Departmental Representative(ld.DR) attended for the Revenue.

2.

We have heard ld.DR and perused the records. The only issue for our consideration is disallowance of Rs.47,48,973/- on account of Employees Contribution to Provident Fund which was paid beyond the due dates mentioned in the relevant statute. All the five grounds are related to the same issue. It is an admitted fact that in the Audit Report it is mentioned that amount of Rs.47,48,973/- was paid

A.Y. 2017-18 Swaraj Excellent Manpower Facilities P. Ltd., [A] beyond the due date mentioned in the respective statute. This amount is Employees Contribution to Provident Fund and ESIC.

3.

However, the issue of delayed payment of Employee’s Contribution of Provident Fund has been decided by the Hon’ble Supreme Court in the case of Checkmate Services (P.) Ltd. Vs. Commissioner of Income-tax-1 vide order dated October 12, 2022 as under : Quote, “ 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 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. ” Unquote.

3.2 Thus, the Hon’ble Supreme Court has held that the Employee’s Contribution towards Provident Fund has to be deposited before the due date mentioned in the respective statute. In this case it is an admitted position by the assessee in the Audit Report that the amount was not deposited before the due date mentioned in The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. Hence, the impugned amount has been rightly disallowed by the AO.

A.Y. 2017-18 Swaraj Excellent Manpower Facilities P. Ltd., [A] Accordingly, the Grounds of appeal raised by the assessee are dismissed.

4.

In the result, appeal of the Assessee is Dismissed.

More judgments on Section 36(1)(va)

All 6,054 judgments and leading authorities on Section 36(1)(va) →

Recent GST High Court judgments

Search GST case law →