TaxTMI 
TaxTMI 
2023 (2) TMI 264
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....mpany and a 100% export oriented unit. It is engaged in the export of processed gherkins and other vegetables and other products for food processing industry. The assessee filed its return for AY 2019-20 on 27.9.2019 on a total income of RS.5,81,19,080. The return was processed u/s. 143(1) by the CPC disallowing delayed EPF/ESI contribution invoking section 36(1)(va) of the Income-tax Act, 1961 [the Act]. On appeal, the CIT(Appeals) upheld the order u/s. 143(1) of the Act. Aggrieved, the assessee is in appeal before the Tribunal. 3. Though the assessee has raised about 15 grounds of appeal, the issue involved is whether deduction is allowable on the delayed remittance of EPF/ESIC contribution by the assessee. 4. The ld.AR submitted th....
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....the contradicting decisions of various High Court. The relevant extract of the decision is as given below - 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, inserting Section 36(1)(va) and simultaneously inserting the second proviso of Section 43B, its intention was not to treat the disparate nature of the amounts, similarly. As discussed previously, the memor....
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....ditures, or out-goings forming part of the assessees' liability. These include liabilities such as tax liability, cess duties etc. or interest liability having regard to the terms of the contract. Thus, timely payment of these alone entitle an assessee to the benefit of deduction from the total income. The essential objective of Section 43B is to ensure that if assessees are following the mercantile method of accounting, nevertheless, the deduction of such liabilities, based only on book entries, would not be given. To pass muster, actual payments were a necessary pre-condition for allowing the expenditure. 53. The distinction between an employer's contribution which is its primary liability under law - in terms of Section 36(1)(iv....
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....se of these liabilities, what constitutes the due date is defined by the statute. Nevertheless, the assessees are given some leeway in that as long as deposits are made beyond the due date, but before the date of filing the return, the deduction is allowed. That, however, cannot apply in the case of amounts which are held in trust, as it is in the case of employees' contributions- which are deducted from their income. They are not part of the assessee employer's income, nor are they heads of deduction per se in the form of statutory pay out. They are others' income, monies, only deemed to be income, with the object of ensuring that they are paid within the due date specified in the particular law. They have to be deposited in terms of such ....