ESS ESS KAY ENGINEERING COMPANY PRIVATE LIMITED,JALANDHAR vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-4, JALANDHAR

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ITA 172/ASR/2023Status: DisposedITAT Amritsar23 August 2023AY 2020-215 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 the disallowance of delayed payments of ESI/EPF made under section 143(1) was proper and justified. The Supreme Court's decision in the Checkmate Services case was relied upon.

What were the facts?

The assessee claimed deduction for delayed payments of ESI/EPF amounting to Rs. 90,40,450/-. The AO/CPC disallowed this claim under section 143(1) of the Income Tax Act, which was upheld by the CIT(A).

What were the issues?

Whether delayed payments of employee's contribution to ESI/EPF are disallowable under section 143(1) in light of Supreme Court's decision in Checkmate Services case. Whether such disallowance is applicable for assessment year 2020-21.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 43B,Section 36(1)(va),Section 139(1),Section 37

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(2)Show list

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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR

Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE

Hearing: 08.08.2023Pronounced: 23.08.2023

The captioned appeal is filed by the assessee against the order of the ld. CIT(A) National Faceless Appeal Centre (NFAC), Delhi dated 20.04.2023 in respect of the assessment year 2020-21 challenging therein the order of the ld. CIT(Appeal) in upholding orders under section 143(1) of Ess Ess Kay Engg. Co. P. Ltd. v. Asstt. CIT the AO/CPC for disallowing the delayed payments of ESI/EPF of Rs.

90,40,450/- which claimed to be duly stood paid under section 43B of the act before the due date of filing the income tax return under section 139(1) of the Act.

2.

None attended for the appellant and the adjournment application filed by is found devoid of merits. Considering the issue EPF and ESI settled by the apex court in the case of Checkmate service, Pvt. Ltd versus CIT- 1 (2022) Taxman.com. 178 (SC), it was decided to hear the ld. DR on the facts of the case and adjudicate the appeal.

3.

The appellant in the grounds contends that Learned, CIT Appeal was wrong and unjustified in law and on facts to have upheld orders u/s 143(1) of the ACT, for disallowing the delayed payments of ESI/EPF of Rs.90,40,450/- which duly stood paid u/s 43B of the Act before the due date of filing the Income Tax Return u/s 139(1) as submitted on 30th January 2021 and the impugned intimation order have been passed on18.12.2021, before any adverse judgment of the jurisdictional Court including Supreme Court and thus intimation order as passed was without any basis and premises. It is further stated in the grounds that the judgment of the Hon'ble Supreme Court of India of 12.10.2022 in Civil Appeal No.

Ess Ess Kay Engg. Co. P. Ltd. v. Asstt. CIT 2833 of 2016 in CHECKMATE SERVICE PRIVATE LIMITED vs CIT1,(2022) Taxman. Com 178(SC), was for the order passed u/s 143(3) of the Income Tax Act and therefore cannot be juxtapose be applicable to the order passed by the DCIT, CPC, Bengaluru and he could not have made an addition of the delayed deposit of the employees share of contribution towards ESI/EPF u/s.143(1) of the Act. The appellant raised the contention that the impugned additions/disallowances of Employee's share of ESI/EPF was otherwise eligible for deduction u/s 37 of the Act being expenditure incurred in due course of carrying on business activities and being a direct charge of expenditure in carrying business activities. Reliance is this regard is placed on decisions of the Hon'ble Courts: i. CIT vs Birla Cotton Spinning & weaving Mills Limited/Birla Bros. (P) Limited (1971) 82 UTR 166 (SC); ii. Mysore Kirloskar Limited vs CIT 166 ITR 836 (Kerala) iii. ) SRMT Limited vs Dy. CIT(2005) 97 TTJ 580 Visakhapatnam Tribunal

4.

In the grounds itself it is stated that various Hon'ble Appellate Tribunals including jurisdictional ITAT Amritsar Bench have already held that the said disallowances/additions as made u/s 36(1)(va) read with section 43B of the Act, would be applicable from Asstt. Year 2021-22 and Ess Ess Kay Engg. Co. P. Ltd. v. Asstt. CIT onwards in view of the clear Legislature intent and provisions as brought about in the Finance Act, 2021 w.e.f. Asstt. Year 2021-22 & onwards only, and as such worthy CIT(A) was absolutely wrong and unjustified to have upheld the impugned additions/disallowances.

5.

Per Contra, the learned DR stands by the impugned order.

6.

We have heard the rival contentions, perused the material on record, impugned order and case law cited for us. We fully agree with the adjustment to the total income or loss can be made only in the terms indicated specifically u/s. 143(1) of the Act.

6.1 The Apex Court in the case of CHECKMATE SERVICE PRIVATE LIMITED (Supra) has settle the issue of late payment of ESI/EPF to the employees by observing that Where assessee-employer deposited amount of employees contribution towards employees' provident fund and employees' state insurance corporation beyond due date stipulated in respective Acts, disallowance made under section 36(1)(va) was justified.

The appellant assessee has failed to rebut the Judgment of the Hon’ble Apex Court (Supra) by any judgment of subsequent date. In view of that matter, an aadjustment under section 143(1)(a) by means of disallowance

Ess Ess Kay Engg. Co. P. Ltd. v. Asstt. CIT made for late deposit of employees' share to relevant funds beyond date prescribed under respective Acts was proper and justified under the law.

7.

In the above view, we hold that there are no infirmity or perversity in the decision of the Ld. CIT(A) to the fact on record. Accordingly, the impugned order upholding orders under section 143(1) of the act, for disallowing the delayed payment of ESI and EPF of Rs. 90,40,450/- is here by sustained.

8.

In the result, the appeal of the assessee is dismissed.

Order pronounced in the open court on 23.08.2023

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