DHANYA PROMOTERS PRIVATE LIMITED,DELHI vs. CENTRAL CIRCLE-13, DELHI

ORDER Per Dr. B. R. R. Kumar, Accountant Member:

The present appeal has been filed by assessee against the order of ld. CIT(A)-26, New Delhi dated 06.12.2021.

“1. That ld. CIT(A) is erred under the law while confirming the order as framed by CPC u/s 143(1) of the Act after making adjustment of impugned prima facie adjustments u/s 143(1) (a) of the Act in the returned income of the appellant.

2. That the ld. CIT(A) is not justified in law and facts while confirming the adjustment of Rs.12,08,174/- u/s 36(1)(va) of the Act as made by CPC without appreciating the fact that the appellant has duly deposited all employee contribution to PF/ESI before due date of filing of ITR u/s Dhanya Promoters Pvt. Ltd. 139(1) and the amendment as made in the section by Finance Bill 2020 is effective from A.Y. 2020-21. 3. That the ld. CIT(A) is not justified in law and facts while confirming the adjustment of Rs.3,79,606/- u/s 37 of the Act as made by CPC without appreciating the fact that the interest as paid by the assessee on late deposit of TDS is allowable business expenditure u/s 37(1) of the Act.” PF & ESI Payment:

"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 43 B 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 Dhanya Promoters Pvt. Ltd. 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 under Section 43 B 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."

Ground No.3 Late Deposit of TDS:

“8. Heard the parties perused the orders of the authorities below. On perusal of the order of the ld. CIT (Appeals) it is noticed that the disallowance made by the CPC, Bangalore in respect of interest paid by the assessee on delayed remittance of TDS placing reliance on the decision of the Jaipur Bench in the case of M/s. Govindam Clearing Agencies Pvt. Ltd. Vs. DCIT in dated 1.09.2020. On the other hand, we observe that the assessee placed reliance on the decision of the Kolkata Bench in the case of DCIT Vs. M/s. Narayani Ispat Pvt. Ltd., Kolkata (supra). On perusal of both the decisions of the Tribunal, we observe that there are divergent views on the issue. In our opinion, whether interest paid by the assessee on delayed remittances of TDS is allowable expenditure or not is certainly a debatable issue and, therefore, is outside the scope of purview of the provisions of section 143(1) of the Act. Thus, the Dhanya Promoters Pvt. Ltd. CPC, Bangalore/Assessing Officer is directed to delete the disallowance made in respect of interest paid on delayed remittances of TDS while passing the return under section 143(1) of the Act. Grounds raised by the assessee are allowed.”