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Income Tax Appellate Tribunal, HYDERABAD BENCHES “B”, HYDERABAD
Before: SHRI LALIET KUMAR & SHRI MADHUSUDAN SAWDIA
O R D E R PER BENCH :
These two appeals filed by the assessee are directed against separate, but identical orders of Commissioner of Income Tax (Appeals) – 12, even dated 31.07.2024 relevant to the assessee for A.Ys. 2018-19 and 2021-22. Since, the facts are identical and issue is common but for the figures, for the sake of 2 Saket Engineers Private Limited, Hyderabad. convenience, these two appeals were heard together and are being disposed of, by this consolidated order.
The assessee has raised common ground for both the assessment years, therefore, for the sake of brevity, the only ground raised in for A.Y. 2021-22 read as under :
“The first appellate authority erred in confirming the disallowance made under Section 36(1)(va) of the Income Tax Act, 1961 without considering the judgment in the case of M/s. MTR Maiya’s Vs. Income Tax Officer (TS- 7893 – ITAT-2023 (Bengaluru)-O) that was submitted during the course of hearing.”
The brief facts of the case are that assessee is a private company engaged in the business of Construction. Assessee company has filed its original return of income for A.Y. 2021-22 on 14.03.2022 admitting total income of Rs.1,72,52,830/- and thereafter, filed revised return of income on the same day, declaring total income of Rs.1,72,52,830/-. The return of income was processed u/s 143(1) of the Income Tax Act, 1961 assessing the total income of the assessee at Rs.2,10,34,190/- raising a demand for Rs.7,44,670/- interalia making disallowance of Rs.2,45,454/- u/s 23 of the Act, Rs.31,20,557/- u/s 41 of the Act and Rs.4,15,348/- u/s 36(1)(va) of the Act. Accordingly, the 3 Saket Engineers Private Limited, Hyderabad.
Asst.Director of Income Tax, CPC, Bengalore had passed intimation order u/s 143(1) of the Act dt.24.08.2022.
Aggrieved with such intimation order, assessee filed an appeal before the LD.CIT(A), who granted partial relief to the assessee. With respect to the ground raised by the assessee before the Tribunal i.e., disallowance of Rs.4,15,348/- u/s 36(1)(va) of the Act, LD.CIT(A) has held as under :
“6.3.3 I have considered additional ground raised by the AR during the course of appellate proceedings and written submissions of the AR. The Hon'ble Supreme Court, in the case of M/s. Checkmate Services Pvt. Ltd. Vs. CIT (Civil Appeal No. 2833 of 2016) pronounced on 12-10-2022, adjudicated the issue of disallowance of deduction claimed under Section 36(1)(va) read with Section 2(24)(x) of the Income Tax Act. The Hon'ble apex court upheld the disallowance of employees contributions to EPF and ESI is if these contributions are not deposited before the due date prescribed in the respective statutes. Regarding the appellant's claim about the difference in dates between the journal entry for liability recognition of salary and the actual payment of salary (when the entry for recovery of employee's contribution of EPF and ESI is made), it is seen that the appellant is following Mercantile System of Accounting and under this system, any sum received by the assessee from employees as contribution to EPF and ESI should be recognized as Received on the day of salary liability recognition. The employee's contributions to EPF and ESI are always held by the employer in a fiduciary capacity. Therefore, the actual payment of salary is not necessary for it to be recognized Income. The liability recognition of salary automatically results in the employee's contribution being deemed as the employer's income. Therefore, respectfully following the judgement of the Hon'ble Apex Court in the case of M/s. Checkmate Services Pvt. Ltd. Vs. CIT (Civil Appeal No. 2833 of 2016), the addition of Rs. 4,15,345/-is confirmed and the ground of appeal no -3 and the additional ground are dismissed.
4 Saket Engineers Private Limited, Hyderabad.
Aggrieved with the order of LD.CIT(A), the assessee is now in appeal before us.
At the outset, the ld.AR sought time as the learned counsel for the assessee is not available.
Per contra, ld.DR has pointed out that the issue in the present case is covered by the judgment of Hon'ble Supreme Court in the case of M/s. Checkmate Services Pvt. Ltd. Vs. CIT reported in Civil Appeal No. 2833 of 2016. She has drawn our attention to the orders passed by the LD.CIT(A) wherein the LD.CIT(A) has extensively relied upon the judgment of Hon'ble Supreme Court reproduced hereinabove. She further submitted that the order of LD.CIT(A) is in accordance with law.
During the hearing, the Bench Clerck had pointed out that in these two appeals the assessee has not deposited the appeal fee and thus, the appeals are also required to be dismissed being defective.
We have heard the rival submissions and perused the material on record. In the present case, intimation order u/s 143(1) of the Act was passed on 24.08.2022 by the Assistant Director of Income Tax, CPC, Bengaluru. On appeal, the LD.CIT(A) has granted part relief to the assessee. Aggrieved with the order of LD.CIT(A), assessee is now before us without depositing the required appeal
5 Saket Engineers Private Limited, Hyderabad. fee required for instituting the appeal in accordance with law. In the present case, the LD.CIT(A) had passed order on 31.07.2024 and appeal was filed before Bangalore Tribunal on 28.09.2024, after depositing Rs.10,000/- as appeal fees. However, thereafter, the appeal had been transferred by Bangalore Tribunal to Hyderabad Tribunal on 30.03.2024. Thereafter, the appeal was registered at Hyderabad Benches. In view of the above, when the appeal fees had been deposited by assessee at Bangalore ITAT, it can not be alleged by Registry that appeal fees had not been deposited. Accordingly, this objection of the Registry is dismissed.
We notice that the LD.CIT(A) has dismissed the appeals of the assessee on the ground that the issue is covered by the judgment of Hon'ble Supreme Court in the case of M/s. Checkmate Services Pvt. Ltd. Vs. CIT (supra), wherein the LD.CIT(A) has extensively mentioned in the paragraph 6.3.3 reproduced hereinabove. In light of the above, we do not find any merit in the appeal filed by the assessee and accordingly, the appeal of the assessee is dismissed.
The facts of the present case and issue involved is identical to the facts and issue which we had considered for A.Y. 2021-22. The reasons given by us in preceding paragraph nos.9 and 10 shall mutatis and mutandis apply to this appeal, as well. Therefore, for 6 Saket Engineers Private Limited, Hyderabad.
similar reasons, we dismiss the appeal of assessee for A.Y. 2018- 19.
In the result, the appeal of assessee is dismissed.
To sum up, both the appeals of the assessee are dismissed.
Order pronounced in the Open Court on 3rd December, 2024. Sd/- Sd/- Sd/- Sd/-Sd/- Sd/- Sd/- Sd/- (MADHUSUDAN SAWDIA) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, dated 03.12.2024. TYNM/sps