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2024 (6) TMI 1272
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....021 (for AYs 2018-19 & 2019-20) arising out of assessment/rectification orders passed u/s. 143(1)/154 of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') by DCIT/ACIT, Circle-2, DHN dated 10.09.2019, 14.12.2019, 16,04,2020, 01.05.2020 and 13.11.2019 respectively. 2. Shri Devesh Poddar, Advocate appeared on behalf of the assessee. Shri P. K. Koley, Sr. DR appeared on behalf of the revenue. 3. Though the assessee has raised as many as 6 grounds of appeal in each of the assessment years but the sole issue involved is in respect of confirming the addition u/s. 36(1)(va) and 43B being Employees share of PF which was deposited after the due date but before filing of the return of income. The details of disallowances made in t....
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.... 1961." Relevant extract of the said judgment is reproduced as under: "* The deduction made by employers to approved provident fund schemes, is the subject matter of Section 36(1) (iv). It is noteworthy, that this provision was part of the original IT Act; it has largely remained unaltered. On the other hand, Section 36(1)(va) was specifically inserted by the Finance Act, 1987, w.e.f. 01-04-1988. Through the same amendment, by Section 3(b), Section 2(24) - which defines various kinds of "income" - inserted clause (x). This is a significant amendment, because Parliament intended that amounts not earned by the assessee, but received by it, - whether in the form of deductions, or otherwise, as receipts, were to be treated as income. T....
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....pply, 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 by the employer is underlined by the condition that it has to be deposited on or before the due date. * The differentiation is also evident from the fact that each of these contributions is separately dealt with in different clauses of Section 36 (1). All these establish that Parliament, while introducing Section 36(1)(va) along with Section 2(24)(x), was aware of the distinction between the two types of contributions. There was a statutory classification, under the IT Act, bet....
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....ially 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 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.....
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....ducted 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 oblig....