2023 (3) TMI 257

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....ls), National Faceless Appeal Centre, Delhi, ["learned CIT(A)"], for the assessment year 2020-21. 2. In this appeal, the assessee has raised the following grounds:- "1. The Commissioner of Income-tax (Appeals)- Income Tax Department, National Faceless Appeal Centre (NFAC), Delhi (CIT(A)) erred in upholding the action of The Asst. Director of Income-tax, CPC Bengaluru (hereinafter referred to as 'the AO') in making disallowance for an amount of Rs 6,30,42,740 on account of employees' contribution to Provident Fund, under section 36(1)(va) of the Act without appreciating the facts in the case of the Appellants. The Appellants pray that the AO be directed to delete the disallowance under section 36(1)(va) of th....

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....concerned department on or before the due date under the relevant statute, the assessee shall not be entitled for deduction to that extent. Being aggrieved, the assessee is in appeal before us. 6. During the hearing, the learned Authorised Representative placed reliance upon the decision of the coordinate bench of the Tribunal in P.R. Packaging Service vs ACIT, in ITA No. 2376/Mum./2022, and submitted that even after the decision of Hon'ble Supreme Court in Checkmate Services (P.) Ltd. vs CIT, [2022] 448 ITR 518 (SC) no disallowance under section 36(1)(va) can be made vide intimation under section 143(1)(a) of the Act. 7. On the contrary, the learned Departmental Representative vehemently relied upon the decision of the Hon'ble Suprem....

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....een 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 the due date, is correct and justified. The non-obstante clause has to....

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....e the assessee from its liability to deposit the employee's contribution on or before the due date as a condition for deduction." 9. We find that, recently, in Nissan Enterprise Ltd. vs DCIT-CPC, in ITA No.3270/Mum/2022, the Tribunal vide order dated 17/02/2023, after considering the aforesaid decision in P.R. Packaging Service (supra) held that pursuant to the decision of the Hon'ble Supreme Court in Checkmate Services (P.) Ltd. (supra), the claim of deduction towards employee's contribution to PF & ESI made by the taxpayer becomes an incorrect claim warranting prima facie adjustment under section 143(1) of the Act. The relevant findings in the aforesaid decision are as under:- "3.1. The ld. AR vehemently relied on the decision....