Disallowance of deductions under s.143(1)(a)(iv) read with s.36(1)(va) upheld for late ESI/PF remittance; procedural section inapplicable

HC upheld ITAT's disallowance of adjustments under s.143(1)(a)(iv) read with s.36(1)(va) because employer deposited ESI/PF contributions after the statutory due dates. The HC rejected the assessee's contention that the SC authority relied upon by ITAT was distinguishable because that assessment arose under s.143(3); the court held the procedural section of the assessment order does not alter the legal principle that delayed remittance defeats the claim. Decision adverse to the assessee.

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Issues involved:
The judgment involves an appeal under Section 260A of the Income Tax Act, 1961 challenging orders disallowing an adjustment under Section 141(1)(a)(iv) read with Section 36(1)(va) in relation to delayed remittance of employees' contributions to Employee State Insurance (ESI) and Provident Fund (PF) for the assessment year 2018-2019.

Summary of Judgment:

Issue 1: Delayed remittance of employees' contributions to ESI and PF

The ITAT noted that the Assessee failed to deposit contributions to ESI and PF before the due date under the PF/ESI Acts for the relevant assessment year. However, the contributions were deposited before the Assessee filed returns under Section 139(1) of the IT Act. Citing the decision in Checkmate Services Pvt. Ltd., the ITAT held that no adjustments or deductions could be claimed based on delayed deposits.

Issue 2: Applicability of Checkmate Services Pvt. Ltd. ruling

The Hon'ble Supreme Court in Checkmate Services Pvt. Ltd. clarified that deductions or adjustments can only be claimed if the employer deposits the contributions in employees' accounts before the due date set out under the PF/ESI Acts. The ITAT's reliance on this ruling was deemed consistent with the law, leading to no grounds for interference with the decisions of the AO, CIT(Appeals), and ITAT.

Issue 3: Assessment under Section 143(1)(a) vs. Section 143(3)

The appellant argued that the assessment order in the present case was under Section 143(1)(a) while Checkmate Services Pvt. Ltd. was under Section 143(3), attempting to distinguish the applicability of the ruling. However, the court found no difference in principle based on the assessment section, emphasizing that deductions can only be claimed if contributions are deposited before the due date.

Conclusion:

The court concluded that no substantial questions of law arose in the appeal, as the contributions were deposited beyond the due date, rendering the appellant ineligible for deductions or adjustments. Therefore, the appeal was dismissed with no order as to costs, upholding the decisions of the three authorities.

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