TaxTMI 
TaxTMI 
2023 (1) TMI 847
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....lculated in the prescribed manner under the relevant Act. As per Employee's Provident Fund Scheme, 1952, the contribution towards provident fund has to be deposited within fifteen days of close of every month. Similar provisions are contained in the Employees State Insurance Act, 1948. The ESI Act 1948, encompasses certain health related eventualities that the workers are generally exposed to; such as sickness, maternity, temporary or permanent disablement, Occupational disease or death due to employment injury, resulting in loss of wages or earning capacity-total or partial. Social security provision made in the Act to counterbalance or negate the resulting physical or financial distress in such contingencies, are thus, aimed at upholding human dignity in times of crises through protection from deprivation, destitution and social degradation while enabling the society the retention and continuity of a socially useful and productive manpower. E.S.I. Scheme being contributory in nature, all the employees in the factories or establishments to which the Act applies shall be insured in a manner provided by the Act. The contribution payable to the Corporation in respect of an employ....
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....ed by the Employer within the due dates prescribed under the relevant Acts or Funds Clause (va) of Sub-section 1 of Section 36, which provides for such deduction, reads as under: Other deductions 36. (1) The deduction provided for in the following clauses shall be allowed in respect of the matter dealt with therein, in computing the income referred to in Section 28- (va) 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.- For the purpose of this clause, "due date" 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:" 7. Thus, the provisions regarding deduction towards employees' contribution of PF/ESI in the hands of the employer u/s. 36 of the Act are very clear. When it is specifically covered under section 36 (1)(va....
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....at these changes in due dates for payments were brought about these amendments only in respect of the employer's contribution as covered u/s 43B and was given retrospective benefit by virtue of the decision of the Hon'ble Apex Court in the case of Alom Extrusions Ltd. However, it can be noticed that due dates for payment of employee's contribution covered u/s 36(1)(va) and its inclusion as income in the hands of the employer under section 2(24)(x) remains unchanged since the beginning and it never came up for consideration of the Hon'ble Supreme Court in the case of Alom Extrusions Ltd. 11. The distinction between the two contributions i.e. employer's contribution and employee contribution was further elucidated by the CBDT's Circular No. 22/2015 dated 17th December, 2015, wherein it was clarified that no disallowance shall be made for employer's share of contribution referred to in clause (b) section 43B which is deposited before 'due date' of filing of return of Income u/s 139(1) of the Income Tax Act, 1961. It was also categorically clarified therein that the said Circular does not apply to claim of deduction relation to employee's contri....
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....nj & Har.) CIT v. Ghatge Patil Transports Ltd. [2014] 368 ITR 749/[2015] 53 taxmann.com 141/228 Taxman 340 Bihar State Warehousing Corpn. Ltd. vs. CIT [2016] 368 ITR 410 (Patna) CIT vs. Vijay Shree Ltd. [2014] 43 taxmann.com 396/224 Taxmann 12 (Cal.) (Mag.) CIT v. Industrial Security & Intelligence India Pvt. Ltd. [Tax Case (Appeal) Nos. 585 and 586 of 2015 & M.P. No. 1 of 2015, dated 24.7.2015 Gauhati High Court in the case of CIT vs. George Williamson (Assam) Ltd. [2006] 284 ITR 619 (Gauhati). 14. In so far as the disallowance of employee share of PF is concerned, the CIT(A) referred to the amendment made to section 36(1)(va) and 43B of the Act by the Finance Act, 2021. The Finance Act, 2021 has amended section 36, sub-section (1), in clause (va), by inserting Explanation-2 which reads thus: "Explanation 2.-For the removal of doubts, it is hereby clarified that the provisions of section 43B shall not apply and shall be deemed never to have been applied for the purposes of determining the "due date" under this clause;'." 15. In view of the conflicting views, the finance Act, 2021 amended section 43B by inserting Explantion-5 thereto which reads thus: "Explanation 5.-For ....
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....cified in the respective Acts and employer's contribution is linked to payment before the due dates specified in the respective Acts and employer's contribution is linked to the payment before the prescribed due date for filing of return u/s. 139(1) of Income Tax Act, 1961.The result of any failure to pay within the prescribed dates also leads to different results. In the case of employee's contribution, any failure to pay within the prescribed due date under the respective PF Act or Scheme will result in negating employer's claim for deduction permanently forever u/s.36(1)(va). On the other hand, delay in payment of employer's contribution is visited with deferment of deduction on payment basis u/s.43B and is therefore not lost totally. "52. When Parliament introduced Section 43B, what was on the statute book, was only employer's contribution (Section 34(1)(iv)). At that point in time, there was no question of employee's contribution being considered as part of the employer's earning. On the application of the original principles of law it could have been treated only as receipts not amounting to income. When Parliament introduced the amendments in 1988-89, i....
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....bility under law - in terms of Section 36(1)(iv), and its liability to deposit amounts received by it or deducted by it (Section 36(1)(va)) is, thus crucial. 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) - unless the conditions spelt by Explanation to Section 36(1)(va) are satisfied 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 amounts - the employer's liability is to be paid out of its income whereas the second is deemed 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. 54. 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 ....