AMA EXTRUSION PVT. LTD.,NAGPUR vs. ASSISTANT DIRECTOR OF INCOME TAX, BENGALURU

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ITA 233/NAG/2022Status: DisposedITAT Nagpur28 November 2022AY 2019-209 pages
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. Since the assessee admitted to not depositing the amount before the due date, the disallowance was justified.

What were the facts?

The assessee paid employee's contribution to PF/ESIC after the due date. The AO disallowed this amount, and the CIT(A) confirmed the disallowance. The assessee argued that payment was made before the due date of filing the return of income.

What were the issues?

Whether delayed payment of employee's contribution to PF/ESIC beyond the statutory due date is disallowable, and if such disallowance can be made under Section 143(1).

Which sections of the Income-tax Act were involved?

Section 36(1)(va),Section 43B,Section 143(1)(a)(iv)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, NAGPUR BENCH : NAGPUR

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

For Appellant: Shri Rajesh Loya – AR
For Respondent: Shri G.J.Ninawe- JCIT
Hearing: 16/11/2022Pronounced: 07/12/2022

ORDER

PER DR. DIPAK P. RIPOTE, AM:

1.

This is an appeal filed by the Assessee against the order of ld.Commissioner of Income Tax(Appeals)[NFAC], Delhi dated 18.07.2022 emanating from the order under section 154 of the Act, 1961 passed by the Asst. Director Income Tax, CPC, Bangalore. The assessee has raised the following grounds of appeal: “(1) That the Rectification Order of the learned Asst. Director of Income Tax, CPC, Bangalore passed u/s. 154 is bad in law and wrong on facts and the learned CIT(A) erred in confirming the same.

(2) That the learned AO erred in law and on facts in making addition of Rs.94,066/- on account of employees contribution to PF/ESIC Fund paid after the due date by invoking provisions of section 36(l)(va) r.w.s. 2(24)(x) and the learned CIT(A) erred in confirming the action of the A.Y.2019-20 AMA Extrusion Pvt. Ltd., [A] AO. On the facts and circumstances of the case, the payment has been made before due date of filing return of income u/s 139 and thus allowable. The action of the authorities is therefore highly unjustified and illegal (3) That the learned CIT(A) erred in law and on facts in confirming the action of learned AO by accepting the disallowance made by CPC merely through electronic processing u/s 143(1). On the facts and circumstances of the case, the disallowance on account of appellant’s failure to pay the employee’s contribution to Provident Fund/ ESIC within the prescribed due dates as per section 36(l)(va) is outside the purview and scope of adjustments as envisaged u/s 143(l)(a)(iv). The action of the learned authorities is illegal.

(4) That the learned CIT(A) erred in law and on facts in holding that the employee’s contribution to Provident Fund and ESIC are governed by the provisions of section 36(1)(va). On the facts and circumstances of the case, following the principal of Judicial Discipline, the decision of Jurisdictional High Court of Bombay is binding on its subordinate authorities and thus the issue is governed by section 43B and the action of the learned CIT(A) is illegal.

(5) That for any other ground with kind permission of your honour at the time of hearing of appeal.”

2.

The only issue for our consideration is disallowance of Rs.94,066/- on account of Employees Contribution to Provident Fund and ESIC which was paid beyond the due dates mentioned in the relevant statute. The Ground No.1 to 4 are related to the same issue.

3.

The ld.Authorised Representative(ld.AR) of the assessee submitted as under: .233/NAG/2022 for A.Y.2019-20 AMA Extrusion Pvt. Ltd., [A] A.Y.2019-20 AMA Extrusion Pvt. Ltd., [A] A.Y.2019-20 AMA Extrusion Pvt. Ltd., [A] A.Y.2019-20 AMA Extrusion Pvt. Ltd., [A] A.Y.2019-20 AMA Extrusion Pvt. Ltd., [A]

4.

The ld.Departmental Representaitve(ld.DR) for the Revenue relied on the order of the Hon’ble Supreme Court in the case of Checkmate Services (P.) Ltd. Vs. Commissioner of Income-tax-1.

5.

We have heard both the parties and perused the records. The only issue for our consideration is disallowance of Rs.94,066/- on account of Employees Contribution to Provident Fund which was paid beyond the due dates mentioned in the relevant statute. All the four grounds are related to the same issue. It is an admitted fact that in the Audit Report it is mentioned that amount of Rs.94,066/- was paid beyond the due date mentioned in the respective statute. This amount is Employees Contribution to Provident Fund and ESIC.

6.

However, the issue of delayed payment of Employee’s Contribution of Provident Fund has been decided by the Hon’ble A.Y.2019-20 AMA Extrusion Pvt. Ltd., [A] Supreme Court. The issue of delayed payment of employee’s contribution of Provident fund has been decided by Hon’ble SC 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.

6.1 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. Accordingly, the Grounds of appeal raised by the assessee are dismissed.

A.Y.2019-20 AMA Extrusion Pvt. Ltd., [A]

7.

In the result, appeal of the Assessee is Dismissed. Order pronounced in the open Court on 7th December, 2022.

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