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Income Tax Appellate Tribunal, JAIPUR BENCHES,B JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA No. 819/JPR/2023 fu/kZkj.k o"kZ@Assessment Years : 2021-22 cuke Telecrats India Private Limited Income Tax Officer, Vs. B-21, Shakti Bhawan, Shiva Ji Colony, Ward 1(1), Jaipur Khatipura Road, Jhotwara, Jaipur LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAHCT 3798 E vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksjls@Assessee by : Sh. Rohan Sogani & Sh. Rajeev Sogani, CA jktLo dh vksjls@Revenue by: Sh. Ajay Malik (CIT) lquokbZ dh rkjh[k@Date of Hearing : 06/03/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 03/06/2024
vkns'k@ORDER
PER: DR. S. SEETHALAKSHMI, J.M.
This appeal is filed by the assessee against the order of the National Faceless Appeal Centre, Delhi [herein after referred to as "NFAC/ld. CIT(A)"] dated 04.11.2023 for the assessment years 2021-22.
The assessee has raised the following grounds of appeal:-
2 ITA No. 819/JPR/2023 Telecrats India Private Ltd vs. ITO “1. In the facts and circumstances of the case and in law, National Faceless Appeal Center/ld. CIT(A) erred in confirming the action of the Id. AO in making the adjustment in the intimation under Section 143(1) of the Income Tax Act, 1961, which are outside the purview of Section 143(1)(a). The action of the ld. AO is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the entire disallowance of Rs. 97,22,957.
In the facts and circumstances of the case in law, National Faceless Appeal Center/ld. CIT(A) erred in confirming the action of the Id. AO in disallowing the Employee Contribution of Rs. 97,22,957, under Section 36(1)(va), w.r.t PF/ESI, when the same was deposited by the assessee firm, before the due date of filing the return of income. The action of the Id. CIT(A) is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by deleting the entire addition made by ld. AO and confirmed by ld. CIT(A).
In the facts and circumstances of the case and in law, National Faceless Appeal Center/ld. CIT(A) erred in confirming the action of the Id. AO in passing order u/s 154 of the Income Tax Act, 1961, without correcting the mistake which was apparent from record. The action of the Id. AO is illegal, unjustified, arbitrary and against the facts of the case. Relief may please be granted by quashing the entire such order.
The assessee company craves its right to add, amend, or alter any of the grounds on or before the hearing.”
The brief facts of the case are that the present appeal is filed against the
intimation issued u/s 154 r.w.s 143(1) of the Act dated 5.12.2022 for AY 2021-22
on the issue of disallowance u/s 36(1)(va) of the Act and adjustment of Book Profit
u/s 115JB of the Act. It is seen from the facts on record that the return of income
for A.Y 2021-22 was filed by the assessee on 14.03.2022, within the extended due
date of 15.03.2022 under section 139(1) of the Act. Before processing the return u/s
143(1), CPC proposed to make the following adjustment u/s 143(1) vide
3 ITA No. 819/JPR/2023 Telecrats India Private Ltd vs. ITO communication dated 21.10.2022. Thereafter, the return was processed u/s143(1)
by CPC on 13.11.2022 and the following additions were made therein:
(i) Deduction under Chapter VIA-u/s 80JAA disallowed Rs. 1,78,00,417 (ii) Employee’s Contribution to PF/ESI u/s 36(1)(va) Rs. 97,22,957/- (iii) Adjustment of Book Profit u/s 115JB – on account of the following items debited to P & L account but not added back by the appellant: Provision for current Tax Rs. 1,32,50,000 Provision for Deferred Tax Rs. 41,919 Total adjustment u/s 115JB Rs. 1,32,91,919
3.1 On the first issue of deduction u/s 80JAA, the disallowance was found to be
not warranted in view of the fact that the assessee had filed the requisite Form
10DA on 15.02.2022 within the stipulated time and had also duly filled in the
deduction details in the ITR filed for AY 2021-22. Thereafter, on appellant’s
request, the intimation u/s 143(1) was rectified by CPC vide intimation u/s 154
r.w.s 143(1) dated 05.12.2022. However, on remaining issues of disallowance u/s
36(1)(va) and adjustment of Book Profit u/s 15JB, the assessee’s request for
rectification was not allowed by CPC.
Being aggrieved by the order issued U/s 143(1) of the IT Act, the assessee
preferred an appeal before the ld. CIT(A). The assessee filed complete details of
the entire payments i.e. employee’s PF & ESI contribution paid before the due date
of filing of return of income.
4 ITA No. 819/JPR/2023 Telecrats India Private Ltd vs. ITO 5. The ld. CIT(A) after considering the amendment made by Finance Act, 2021
and the decision of Hon’ble Supreme Court in case of Checkmate Services Pvt.
Ltd. vs. CIT (2022) 218 DTR 401 confirmed the adjustment made by CPC.
During the course of hearing, the ld. AR of the assessee prayed for deletion of
addition of Rs. 97,22,957/- which was confirmed by the ld. CIT(A) towards
belated payment of employees contribution to PF and ESI u/s 2(24)(x) r.w.s.
36(1)(va) of the Act. The ld.AR of the assessee relied upon the following
Jurisdictional High court of Rajasthan in case JKs Employees Welfare Fund v/s
ITO (1993)66 Taxman 447(Rajasthan), wherein the addition of employees share
in PF and ESI paid on or before the due date of filing of return has been deleted in
the case and referred to CBDT notification dated 04.01.2012.
Per contra, the ld. DR also relied on the judgment of Hon’ble Apex Court in
case of Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. vs
CIT-1, 143 Taxmann.com 178 (SC)/Civil Appeal No. 2833 of 2016 with a request
to consider the same.
We have heard the contentions of the parties and perused the material placed
on record. The bench noted that the assessee has raised the issue of disallowance
5 ITA No. 819/JPR/2023 Telecrats India Private Ltd vs. ITO of Rs. 97,22,957/- under section 36(1)(va) r.w.s 2(24)(x) of the Act. This
disallowance has been made by CPC u/s 143(1) (a)(iv) based on the details
provided by the assessee itself in the e-filed Tax Audit Report in Form 3CD at
clause 20(b). According to the assessee, though there was delay in depositing the
employees’ contribution to PF/ESI as prescribed u/s 36(1)9va) of the Act,
disallowance thereof is beyond the scope of section 143(1) and the that it is
arbitrary and against facts of the case. The issue is now squarely covered by the
decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt Ltd
vs CIT in Civil Appeal No.2833 of 2016 dated 12.10.2022, wherein, the Hon’ble
Supreme Court has categorically held that if the employees contribution to PF and
ESI has been paid beyond the time prescribed under the relevant PF Act, then same
is not allowable under section 43B even after the payment has been made before
the due date of filing of return under the Income tax Act. It was submitted that the
amount of employees contribution to PF and ESI, which has not been paid within
the due date as prescribed under the relevant Act, has been held by Hon’ble
Supreme Court to be not allowable u/s.36(1)(va) of the Act. It was the submission
that the Hon’ble Supreme Court in paras 52 & 53 has also categorically held that
the provisions of section 43B would not apply to the employees’ contribution to PF
and ESI. The relevant portion of the Judgement of Hon’ble Supreme Court in the
case of Checkmate Services Pvt. Ltd. vs CIT-1 (supra) is reproduced as under:-
6 ITA No. 819/JPR/2023 Telecrats India Private Ltd vs. ITO
“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.
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 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
7 ITA No. 819/JPR/2023 Telecrats India Private Ltd vs. ITO
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.
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.” In view of the above deliberations and the decision taken by the Hon’ble Supreme
Court in the case of Checkmate Services (P) Ltd. vs CIT-1(supra), the Bench
sustains the addition confirmed by the ld. CIT(A) by dismissing the appeal of the
assessee.
In the result, appeal of the assessee is dismissed.
Order pronounced in the open court on 03/06/2024.
Sd/- Sd/- ¼ jkBksM deys'k t;UrHkkbZ ½ ¼ Mk0 ,l- lhrky{eh ½ (Rathod Kamlesh Jayantbhai) (Dr. S. Seethalakshmi) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 03 /06/2024 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू The Appellant- Telecrats India Private Limited, Jaipur 1. izR;FkhZ@ The Respondent- ITO, Ward 1(1), Jaipur 2. 3. vk;dj vk;qDr@ The ld CIT 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZQkbZy@ Guard File ITA No. 819/JPR/2023) vkns'kkuqlkj@ By order, सहायक पंजीकार@Aेेजज. त्महपेजतंत