TaxTMI 
TaxTMI 
2022 (4) TMI 504
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....turn u/s 143(1) of the Income Tax Act, 1961 (in short 'Act'), determining the taxable income at Rs. 17,18,720/-. The CPC has disallowed a sum of Rs. 2,19,696/-, being late payment of Employee contribution of PF and ESI. The assessee filed a rectification petition u/s 154 of the Act to CPC, which upheld the intimation u/s 143(1). 3. Aggrieved by the order of the CPC, the assessee filed appeal before the CIT(A) which was migrated to the NFAC in terms of notification No.76/2020 in S.O.No. 3296(E), dated 25/09/2020 from CBDT. The CIT(A) dismissed the appeal filed against intimation u/s 143(1) and stated that the decision shall stand covered by the decision in the own case of the assessee, passed against the appeal against the order u/s 154. 4. Aggrieved by the order of the Ld.CIT(A), the assessee filed appeals before the Tribunal. The grounds are extracted from I.T.A. No.262/Viz/2021. 1. The Commissioner of Income Tax (Appeals), National Faceless Appeals Centre (in short "CIT(A), NFAC") ought not to have disposed of the appeal as not maintainable by holding the view that the disputed issue is covered by the appeal filed against order passed u/s. 154 of IT Act, without ap....
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....y relied on the order of the CIT(A) and accepted the fact that that the payment to employees contribution to PF was made within the due date of filing of return of income by the assessee u/s.139(1) of the Act. 7. We have heard both the parties and perused the material placed on record. In the instant case, there is no dispute that the return was processed u/s 143(1), subsequently thereafter sustained in the rectification order u/s 154, and there was no scrutiny assessment made u/s 143(3) of the Act. It is settled issue that no debatable issues are permitted to be made adjustments u/s 143(1) of the Act. In the instant case, what was added in the intimation u/s 143(1) was the employees contribution to PF and ESI. Hon'ble Madras High Court in the case of Redington (India) Ltd. held that employees contribution to PF and ESI is also allowable deduction, if, the same is paid before the due date for filing the return of income. This Tribunal in the case of Andhra Trade Development Corporation in I.T.A. No.434/Viz/2019 dated 05.05.2021 held that debatable issues are not permitted to be made adjustments while processing the return of income u/s 143(1) of the Act. For the sake of clarity ....
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....The relevant Clauses 8 & 9 of the memorandum explaining the provisions are reproduced as under:- "Rationalisation of various Provisions Payment by employer of employee contribution to a fund on or before due date Clause (24) of section 2 of the Act provides an inclusive definition of the income. Sub-clause (x) to the said clause provide that income to include any sum received by the assessee from his employees as contribution to any provident fund or superannuation fund or any fund set up under the provisions of ESI Act or any other fund for the welfare of such employees. Section 36 of the Act pertains to the other deductions. Sub-section (1) of the said section provides for various deductions allowed while computing the income under the head ‗Profits and gains of business or profession'. Clause (va) of the said sub-section provides for deduction of any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the due date. Explanation to the said clause pr....
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....clause to clarify that the provision of section 43B does not apply and deemed to never have been applied for the purposes of determining the due date under this clause; and (ii) amend section 43B of the Act by inserting Explanation 5 to the said section to clarify that the provisions of the said section do not apply and deemed to never have been applied to a sum received by the assessee from any of his employees to which provisions of sub-clause (x) of clause (24) of section 2 applies. These amendments will take effect from 1st April, 2021 and will accordingly apply to the assessment year 2021-22 and subsequent assessment years. In the present case also, before insertion of Explanation 2 to Section 36(1)(va) of the Act, there is ambiguity regarding due date of payment of employees' contribution on account of provident fund and ESI, whether the due date is as per the respective Acts or up to the due date of filing of return of income of the assessee. As noted by Hon'ble Supreme Court in the case of CIT vs. Vatika Township Pvt. Ltd., 367 ITR 466, an amendment made to a taxing statute can be said to be intended to remove hardship only of the assessee and not of th....
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.... contribution is deemed to be income of the assessee, if the employer not paid the same to the provident fund account of the employee within due date specified under the provisions of PF Act. It is the contention of the assessee that second proviso to section 43B of the Act provides that no deduction shall be allowed unless such sum is actually been paid on or before due date as specified in explanation to 36(1)(va) of the Act which was omitted by the Finance Act, 2003 w.e.f. 1.4.2004 and accordingly, there was no special provision regarding employees' contribution to PF. It is further contended that as per the amended provisions of section 43B of the Act, any sum payable by the assessee as an employer by way of contribution to PF shall be allowed, if the same is paid on or before the due date of filing of return of income u/s 139(1) of the Act. 6. The only issue to be resolved is whether the assessee would be entitled to claim deduction for the employees' contribution made to PF after the due date prescribed under the PF Act, but before the due date prescribed for filing of income tax return in the light of the provisions contained in section 36(1)(va) of the Act and sect....
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.... to section provides that any sum paid by the assessee on or before the due date of furnishing return of income u/s 139(1) of the Act, then no disallowance can be made under the provisions of section 43B of the Act. A careful consideration of section 43B of the Act, it is clear that an extension is granted to the assessee to make the payment of PF contributions or any other fund till the due date of furnishing return of income u/s 139(1) of the Act. Therefore, in our opinion, there is no difference between employees and employer contribution to PF and if such contribution is made on or before the due date of furnishing return of income u/s 139(1) of the Act, then deduction is to be allowed under the provisions of section 43B of the Act. 8. The Hon'ble Karnataka High Court, in the case of Essae Teraoka (P) Ltd. Vs. DCIT 366 ITR 408 took the view that the word contribution occurring in section 43B of the Act would include employees' contribution to PF in the light of the definition of the word contribution as per the provisions of section 2(c) of the PF Act. As per the said section, contribution would mean both employer's contribution and employees' contribution. Accordingly....