NEW LIGHT FACILITY MANAGEMENT ,JLANDHAR vs. INCOME TAX OFFICER WARD -4 (3), JALANDHAR

Per Dr. M. L. Meena, AM:

This appeal has been filed by the assessee against the order of the Ld. CIT(A) National Faceless Appeal Centre (NFAC), Delhi dated 29.03.2023 in respect of Assessment Year 2020-21 challenging there in the

2 ITA No. 140/Asr/2023 New Light Facility Management v. ITO jurisdiction of the CIT(A) passing an order u/s 154 of the Act contending

therein that there was no patent mistake apparent from the record in the

appellate order u/s 250 of the I.T. Act.

ld. CIT(A) has exceeded in its jurisdiction in passing the impugned order

u/s 154 dated 29.03.2023 since there was no apparent mistake from the

record as the assessee has admittedly deposited the employees’

contribution to PF & ESI before the due date of filing of the income tax

return, therefore, respectfully following the decisions of the jurisdictional

ITAT, the CIT(A) had legally allowed the appeal of the assessee u/s. 250 of

the I.T. Act vide order dated 28.09.2022. The counsel argued that the ld.

CPC, Bangalore, while processing the return u/s 143(1)(a)(iv), disallowed

the Employees Contribution to the Provident Fund, where as the Tax

Auditor had not stated in the instant case to disallow Employees

Contribution to Provident Fund. The counsel argued that the decision of the

Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. v. CIT

reported in 143 taxmann.com 178 (SC) dated 12.10.2022 was rendered in

the context where assessment was framed u/s 143(3) of the Act and not

u/s 143(1)(a). Thus, the ld. counsel contended that the action of the CPC,

3 ITA No. 140/Asr/2023 New Light Facility Management v. ITO Bangalore while disallowing the Employees’ Contribution Provident Fund

while processing in the return u/s 143(1)(a)(iv) of the Act was against the

provisions of the Act as it would not fall within the ambit of the prima facie

largest adjustments and there is no mistake apparent from the record to be

rectified the order dated 28.09.2022 of the worthy CIT(A), NFAC, Delhi. He

pleaded that the impugned order is bad in the eyes of law.

u/s 154 of the Act. The DR has referred to the relevant part of the ld. CIT(A)

order is as follows:

“1. It has finally been held by Hon’ble Supreme Court that there is clear distinction between 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 from its employees’ [in terms of Sec. 36(1)(va)]. 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) and therefore, subjected to conditions spelt out by Explanation to Section 36(1)(va) 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 contributions - the employer’s liability is to be paid out of its income whereas the second is deemed to be 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. If the same is not deposited as per mandate of Sec.36(1)(va), the deduction of the same would not be available to the assessee.

4 ITA No. 140/Asr/2023 New Light Facility Management v. ITO from record in the order of Ld. CIT(Appeal) passed u/s. 250 of the I. T. Act dated 28.09.2022 in as much as deduction on account of delayed payment of employees contribution to ESI amounting to Rs. 11,70,718/- was wrongly allowed and the issue of delayed payment of employees contribution to PF amounting to Rs. 15,85,541 /- was not adjudicated. 3. In view of the above facts of the case and in law, I hold that the appellant is not eligible for deduction u/s. 36(1)(va) of the I.T. Act in respect of delayed payment of employees contribution to ESI and PF amounting to Rs.11,70,718/- and Rs.15,85,541/- respectively. The impugned order u/s. 250 dated 28.09.2022stand amended accordingly.

the orders passed by the CIT(A) and in the case law cited before us.

Admittedly, the first appellate order u/s 250 of the I.T. Act in the case of the

assessee passed on 28.09.2022 well before he pronouncement of the

decision by the Hon’ble Apex Court in the case of Checkmate Services Pvt.

Ltd. v. CIT (supra) dated 12.10.2022 on the issue of deposit of Employees’

Contribution to PF & ESI within the due date prescribed under the

provisions of relevant law. With the pronouncement of the Hon’ble Apex

Court judgment in the case of Checkmate Services Pvt. Ltd. v. CIT (supra),

the law is settled on the issue of the employees’ contribution towards PF &

ESI which has to be deposited within the due date prescribed under the

provisions of PF & ESI Act. Since the assessee has failed to deposit the

employees’ contribution towards PF & ESI within the prescribed due dates

5 ITA No. 140/Asr/2023 New Light Facility Management v. ITO which has been earlier allowed by the CIT(A) in its earlier order passed u/s

250 of the Act dated 28.09.2022 has been rectified by holding that the AO

CPC in the intimation passed u/s 143(1)(a)(iv) has rightly allowed the said

deduction of the expenditure.

Checkmate Services Pvt. Ltd. v. CIT (supra), there was a mistake apparent

from the record in the order of the ld. CIT(A) u/s 250 of the Act dated

28.09.2022 in as much as deduction on account of delayed payment of

employees’ contribution to PF & ESI, amounting to Rs.11,70,718/- and

Rs.15,85,541/- was wrongly allowed.

was not eligible for deduction u/s 36(1)(va) of the IT Act in respect of

delayed payment of employees’ contribution to PF & ESI amounting to

Rs.11,70,718/- and 15,85,541/- respectively. The ld. CIT(A) by following the

Hon’ble Apex Court judgment in the case of Checkmate Services Pvt. Ltd.

v. CIT (supra) dated 12.10.2022 has exercised a valid jurisdiction by

rectifying the mistake apparent from the record u/s 154 of the Act in the

appellate order passed u/s 250 of the I.T. Act dated 28.09.2022.

6 ITA No. 140/Asr/2023 New Light Facility Management v. ITO 7. In the above view, we find no infirmity or perversity in the order of ld.

CIT(A) to the facts on record. Thus, the contention raised by the appellant

are held to be devoid of merits and substance. Accordingly, the order of the

ld. CIT(A) is sustained.

In the result, the appeal of the assessee is dismissed. 8.

Order pronounced in the open court on 18.07.2023

Sd/- Sd/- (Anikesh Banerjee) (Dr. M. L. Meena) Judicial Member Accountant Member *GP/Sr.PS* Copy of the order forwarded to: (1) The Appellant: (2) The Respondent: (3) The CIT(Appeals) (4) The CIT concerned (5) The Sr. DR, I.T.A.T. True Copy By Order