AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (3) TMI 1190
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.... Contribution for ESI and PF Expenses amounting to Rs. 1,07,733/- and addition of the same to the total income of the appellant. 3. That the Ld. CIT (Appeals) - 17, Kolkata erred in law as well as on facts of the case by confirming the disallowance of puja expenses of Rs. 1,48,252/- and addition of the same to the total income of the appellant. 4. That the Ld. CIT(Appeals)- 17, Kolkata erred in law as well as on facts of the case by confirming the disallowance of 10 percent of travelling conveyance expenses amounting Rs.64,210/- based on estimate and thereby making addition to the total income of the appellant. 5. That the Ld. CIT(Appeals)- 17, Kolkata erred in law as well as on facts of the case by confirming the disallowance u/s 14A r/w rule 3D of the I. T. Act, 1961 of Rs 5250/- and addition of the same to the total income of the appellant 6. That the Ld. CIT(Appeals)- 17, Kolkata erred in law as well as on facts of the case by confirming the disallowance of the whole amount of security charges paid of Rs.24,146/- due to non-deduction of TDS instead of 30% as specified in Sec 40(a)(ia) of the Income tax Act, 1961. 7. That the Ld. CIT ....
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....he EPF/ESI, on or before the due date. The last expression "due date" was dealt with in the explanation as the date by which such amounts had to be credited by the employer, in the concerned enactments such as EPF/ESI Acts. Importantly, such a condition (i.e., depositing the amount on or before the due date) has not been enacted in relation to the employer's contribution (i.e., Section 36(1)(iv)). * The significance of this is that Parliament treated contributions under Section 36(1)(va) from those under Section 36(1)(iv). The latter (hereinafter, "employers' contribution") is described as "sum paid by the assessee as an employer by way of contribution towards a recognized provident fund". However, the phraseology of Section 36(1)(va) differs from Section 36(1)(iv). It enacts that "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." The essential character of an employees' contribution, i.e., that it is part of the employees' income, held in trust b....
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....ther the amount is received from the employee or by way of deduction authorized by the statute) as income - it is the character of the amount that is important, i.e., not income earned. Thus, amounts retained by the employer from out of the employee's income by way of deduction etc. were treated as income in the hands of the employer. The significance of this provision is that on the one hand it brought into the fold of "income" amounts that were receipts or deductions from employees income; at the time, payment within the prescribed time - by way of contribution of the employees' share to their credit with the relevant fund is to be treated as deduction (Section 36(1)(va)). The other important feature is that this distinction between the employers' contribution (Section 36(1)(iv)) and employees' contribution required to be deposited by the employer (Section 36(1)(va)) was maintained - and continues to be maintained. On the other hand, Section 43B covers all deductions that are permissible as expenditures, or out-goings forming part of the assessees' liability. These include liabilities such as tax liability, cess duties etc. or interest liability having regard ....
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...., 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 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 condition for deduction." Respectfully following the decision of Hon'ble Supreme Court (supra) which squarely covers the Ground No.2 taken by the assessee is dismissed. Accordingly....
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..... 7.2 The ld. D/R, however, has relied upon the newly inserted explanations to Section 14A of the Act, which is extracted for the sake of ready reference:- "14A. [(1)] [Notwithstanding anything to the contrary contained in this Act, for the purposes of] computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act.] ************************ *********************** [Explanation.-For the removal of doubts, it is hereby clarified that notwithstanding anything to the contrary contained in this Act, the provisions of this section shall apply and shall be deemed to have always applied in a case where the income, not forming part of the total income under this Act, has not accrued or arisen or has not been received during the previous year relevant to an assessment year and the expenditure has been incurred during the said previous year in relation to such income not forming part of the total income.]" The ld. D/R has further relied on the decision of the Co-ordinate Bench of ITAT Guwahati in the case ....