TaxTMI 
TaxTMI 
2023 (3) TMI 509
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....erred under the law while confirming the order as framed by CPC u/s 143(1) of the Act after making adjustment of impugned prima facie adjustments u/s 143(1) (a) of the Act in the returned income of the appellant. 2) That the CIT(A) is not justified in law and facts while confirming the adjustment of Rs.12,82,072/- u/s 36(1)(va) of the Act as made by CPC without appreciating the fact that the appellant has duly deposited all employee contribution to PF/ESI before due date of filing of ITR u/s 139(1) and the amendment as made in the section by finance bill 2020 is effective from A.Y 2020-21 . 3) That the CIT(A) is not justified in law and facts while confirming the adjustment of Rs.26,17,302/- u/s 37 of the Act as made by CP....
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....being interest on late deposit of TDS, ld. CIT (A) upheld the disallowance inter alia by referring the decision of ITAT, Mumbai Bench in the case of DNV GL AS (formerly known as DET Norske Veritas AS) vs. ADIT (International Taxation) in ITA No.4687/Mum/2016 dated 31.05.2017. 6. Against this order, assessee is in appeal before us. We have heard both the parties and perused the records. 7. As regards the issue of late deposit of PF & ESI is concerned, we note that the said issue has been settled by Hon'ble Supreme Court in a batch of appeals in Civil Appeal No.2833 of 2016 in the case of Checkmate Service P. Ltd. vs. CIT-1 judgement dated 12.10.2022. Hon'ble Apex Court has expounded that the employees' contribution in this regard depos....
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....y inserting the second proviso of Section 43B, its intention was not to treat the disparate nature of the amounts, similarly. As discussed previously, the memorandum introducing the Finance Bill clearly stated that the provisions - especially second proviso to Section 43B - was introduced to ensure timely payments were made by the employer to the concerned fund (EPF, ESI, etc.) and avoid the mischief of employers retaining amounts for long periods. That Parliament intended to retain the separate character of these two amounts, is evident from the use of different language. Section 2(24)(x) too, deems amount received from the employees (whether the amount is received from the employee or by way of deduction authorized by the statute) as inco....
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....llowing the expenditure. 53. The distinction between an employer's contribution which is its primary liability 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 whe....
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....med 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 welfare enactments. It is upon deposit, in terms of those enactments and on or before the due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated as a deduction. Thus, it is an essential condition for the deduction that such amounts are deposited on or before the due date. If such interpretation were to be adopted, the non-obstante clause under Section 43B or anything contained in that provision would not absolve the assessee from its liability to deposit the employee's contribution on or before the due date as a condit....