TaxTMI 
TaxTMI 
2022 (1) TMI 280
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....the outset, the only effective ground is regarding sustaining of addition Rs. 3,73,030/- on account of late payment PF/ESIC u/s. 43B of the Income Tax Act, 1961 ("the Act"). 4. The Ld. Counsel for the assessee submitted that the issue is squarely covered in favour of the assessee by the judgment of the Hon'ble Delhi High Court rendered in the case of PCIT vs Pro Interactive Service (India) Pvt.Ltd. in ITA No.983/2018 [Del.] order dated 10.09.2018 and in the case of CIT vs AIMIL Ltd. 321 ITR 508 and stated that that these binding precedents have been followed by the various Benches of the Tribunal. 5. Per contra, Ld. Sr. DR vehemently opposed these submissions and submitted that law is clear in this respect and he relied upon the decision of Ld.CIT(A). He further relied upon the decision of Hon'ble Delhi High Court in the case of CIT vs Bharat Hotels Ltd. [2019] 103 Taxmann.com 295 (Delhi) wherein the Hon'ble High Court has decided the issue in favour of the Revenue by observing as under:- 8. "Having regard to the specific provisions of the Employees Provident Funds Act and ESI Act as well as the concerned notifications which granted a grace period of 5 days (which ap....
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....ain conditions laid down by the legislature. There are two limbs of this contribution by the employer: (a) Employer's own contribution (b) Employee's contribution Both are to be deposited by the employer only. On behalf of the employee, the employer deposits the money in the designated fund. The respective Acts have provided due dates for such deposits to be made. The allowability of expense related to employers contribution is governed by Section 43B whereas allowability under the Income tax Act related to employees contribution which is governed by section 36(1 )(va). 6.4 The actual intent of the legislature regarding these provisions is analyzed as under: Before Section 43B, there is a headnote which says ''certain deductions to be only on actual payment". It means irrespective of the method of accounting followed by the appellant, the deduction will be allowed on actual payment only and in such case the legislature has extended the time limit for payment before the filing of the return which has been brought by the legislature as proviso to section 43B. Section 43B(b) talks about employers contribution only, the relevant pro....
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....ate" means the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued thereunder or under any standing order, award, contract of service or otherwise;] 6.7 From the above specific provisions, there remains no ambiguity that appellant was entitled to claim deduction u/s 36(1 )(va) only if it has credited the amount of contributions received towards PF & ESI from its employees before the due date of the relevant funds, which in this case has not been complied with. Hence, I am of the considered view that appellant was not entitled to claim deduction u/s 36(1 )(va) while filing the ITR and the amount of disallowance to be made u/s 36 should have been disclosed in the ITR but appellant failed to do so and the amounts pertaining to employees contributions towards EPF and ESIC which was late deposited was claimed allowable suo moto ignoring the provisions to the Act which tantamount to incorrect claim not allowable. 6.8 It is further pertinent to mention here that appellant should have made disallowance while filing the ITR in term....
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....hus it is evident that while processing the return u/s 143(1), CPC has rightly made adjustments in respect of incorrect claim of deduction u/s 36(1 )(va) of the Act in respect of contributions received from employees by the appellant towards EPF and ESIC, which was not credited to the account of the employees by the due dates provided in the respective Acts. Therefore, I am of the considered view that the adjustment made u/s 143(1) is well within the scope of Section 143(1) as adjustment was in respect of an incorrect claim which finds place under Sub-Clause (ii) of Clause (a) of Section 143(1), mentioned supra, and there is no inconsistency in processing the return and the submissions made by the appellant are factually incorrect. 6.12 In the statement of facts, appellant has placed reliance on the decision in the case of CIT vs Aimil Ltd (2010) 229 CTR 448 and on the basis of the same it is being claimed that the claim of deduction in respect of late deposit of EPF is allowable. In this connection, it is pertinent to mention here that reliance placed on judicial pronouncement in the case CIT vs Aimil Ltd, mentioned supra, by the appellant is preceded by the Hon'ble Delhi....
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....yees contribution to the employees account in the relevant fund under any Act or rule or order or notification issued thereunder or any standing order or award or service or otherwise. Meaning thereby, in case, employer fails to deposit the entire amount towards employees contribution on account of PF & ESI with concerned department on or before the due date under PF & ESI, the assessee shall not be entitled for deduction to that extent. 10. Decision of the Hon'ble Supreme Court relied upon by the assessee cited as CIT vs. Atom Extrusions Ltd. (supra) is not applicable to the facts and circumstances^ of the case because Hon'ble Supreme Court has decided the issue in Atom Extrusions Ltd. case qua employers contribution as per section 43B(b) of the Act and not qua employees contribution u/s 36(1 )(va) of the Act. 11. Hon'ble jurisdictional High Court in the case of CIT Vs. Bharat Hotels Ltd. (2019) 410 ITR 417 (Delhi) (supra) decided the identical issue qua delayed deposit of employees contribution on account of PF & ESl against the assessee by holding that assessee would be entitled to deduction in terms of section 36(1)(va) of the Act to the extent if the ....
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.... was not correct. The assessee undoubtedly was entitled to claim the benefit and properly treat such amounts as having been duly deposited, which were in fact deposited within the period prescribed (i.e. 15 + 5 days in the case of EPF and 21 days + any other grace, period in terms of the extent notification). As far as the amounts constituting deductions from employees' salaries towards their contributions, which were made beyond such stipulated period, obviously the assessee was not entitled to claim the deduction from its returns. 9. In view of this discussion, the Revenue's appeal is partly allowed. The AO is directed to examine the contributions made with reference to the dates when they were actually made and grant relief to such of them which qualified for such relief in terms of the prevailing provisions and notifications. We also clarify that the assessee would be entitled to deduction in terms of Section 36(1 )(va) of the Act.'' 12. In view of what has been discussed above and following the decision rendered by the Hon'ble jurisdictional High Court in case of CIT vs. Bharat Hotels Ltd. (supra), we are of the considered view that the assessee compa....
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....wara Sahakara Sakkare Karkhane Ltd. Kollegal (Under Liquidation) Represented by the Liquidator with Civil Appeal No. 2433 of 2019. Thus, the reliance placed on the above judicial pronouncements wherein the SLP of the department was dismissed does not make it a case that subsequent orders of jurisdictional High Court or ITAT cannot be relied upon. 6.14 Taking into consideration the facts of the case and latest judicial precedence available on record, I am of the considered view that the appellant is not entitled for deduction u/s 36(1 )(va) in respect of delayed payment of employee's contribution towards EPF and ESIC before the due date of filing of ITR. The appellant is keeping Govt, money in his possession which is against the spirit of the law. Also there will be no sanctity for any due date if the same is allowed till another date. Thus, the ground of appeal taken by the appellant is dismissed. 7. In the result, the appeal is dismissed." 7. I find merit in the contention of Ld. Counsel for the assessee that the issue is covered by the judgement of Hon'ble Delhi High Court rendered in the case of AIMIL Ltd. (supra) wherein it has been held:- 17. "We ....