TaxTMI 
TaxTMI 
2022 (12) TMI 1528
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....ate Insurance (ESI) contribution of Rs.3,408/-, aggregating Rs.2,12,833/- by holding that these payments are made beyond the due date prescribed under the respective statutes i.e., Provident Fund Act and ESI Act. According to the grounds raised, the first facet of ground raised is that these adjustments falls outside the scope / ambit of the provisions of section 143(1) of the Act and hence, the CIT(A) & ADIT, CPC both erred in fact and in law. 3. Brief facts are that the assessee filed return of income on 30.03.2021 for the relevant assessment year 2020-21 and the same was processed by the ADIT, CPC, Bangalore by intimation u/s.143(1) of the Act dated 24.12.2021 thereby making adjustment in regard to delayed payment of employees contributions of PF funds amounting to Rs.2,09,425/- and ESI contribution amounting to Rs.3,408/- aggregating to Rs.2,12,833/- beyond the prescribed period under the respective statutes of PF Act and ESI Act. The CPC, Bangalore made this adjustment by making disallowance under intimation u/s.143(1) of the Act under Annexure 'other information' clause - 6(s), wherein amount debited to profit & loss account are disallowable u/s.36(b) of the Act due to non....
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....y incorrect claim and if such incorrect claim is apparent from any information in the return of income and moreover disallowance of expenditure indicated in the audit report and not taken into account in the total income in the return of income, the same is to be disallowed while making prima-facie adjustment under this provision. The ld.senior DR relied on the order of CIT(A) who has elaborately discussed this issue. 7. We have heard rival contentions and gone through facts and circumstances of the case. The admitted facts are that as per audit report filed by assessee along with the return of income in Form No.3CA, the assessee has filed complete details of the dates of payments of PF & ESI. Admittedly, the assessee has remitted delayed payment of employees contributions of PF & ESI beyond the due date as prescribed under the PF & ESI Act but before the date of filing of return of income. The details are as under:- Employees Provident Fund Month Place Employees contribution Due date for payment Actual date of payment No. of days delay Apr-19 HO 3,919 15-May-19 17-Sep-19 125 May-19 HO 3,228 15-Jun-19 18-Sep....
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....the audit report as filed by assessee along with return of income and particularly clause No.20(b). The details are completely provided by assessee. 8. Now, the question arises whether in view of the provisions of section 143(1)(a) of the Act, while processing the return of income filed by the assessee, the total income or loss shall be computed after making the following adjustments as described u/s. 143(1)(a) (ii) of the Act i.e., an incorrect claim, if such incorrect claim is apparent from any information in the return or not. The Memorandum of Finance Bill, 2008 as well as Finance Bill, 2016 explaining the provisions of section 143(1)(a)(ii) of the Act will explain the situation and the relevant memorandum of Finance Bill, 2008 and Finance Bill, 2016 are being reproduced as it is:- Memorandum to Finance Bill, 2008 Correction of arithmetical mistakes and adjustment of incorrect claim under section 143(1) through Centralised Processing of Returns. Generally, tax administrations across countries adopt a two-stage procedure of assessment as part of risk management strategy. In the first stage, all tax returns are processed to correct arithmetical mistakes, inte....
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....osed that- (a) the Board may formulate a scheme with a view to expeditiously determine the tax payable by, or refund due to, the assessee, (b) the Central Government may issue a notification in the Official Gazette, directing that any of the provisions of this Act relating to processing of returns shall not apply or shall apply with such restrictions, modifications and adaptations as may be specified in the notification. However, such direction shall not be issued after 31st March 2009; (c) every notification shall be laid before each House of Parliament as soon as such notification is issued. Along with the notification, the scheme referred above is also required to be laid before each House of Parliament. Similar amendment has also been proposed in section 115WE of the Incometax Act, relating to fringe benefits. These amendments will take effect from lst April, 2008. Memorandum to Finance Bill 2016 Legislative framework to enable and expand the scope of electronic processing of information In order to expeditiously remove the mismatch between the return and the information available with the Department, it is proposed....
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....al date of payment to the concerned authorities and these payments have been made beyond the due dates specified in the respective acts i.e., Provident Fund Act & ESI Act, which attracted the provisions of section 36(1)(va) r.w.s. 2(24)(x) of the Act leading to disallowance of this sum to the extent not paid on or before the due date stipulated in the respective PF Act and ESI Act. 10. Coming to another angle that this issue has been settled by the Hon'ble Supreme Court in the case of Checkmate Services Pvt. Ltd., supra and what will be the impact of law laid down by Hon'ble Supreme Court and this has been explained by Hon'ble High Court of Madras in the case of South Industrial Corporation Ltd., (2002) 258 ITR 481, wherein it is held as "When a statutory provisions is interpreted by the apex court in a manner different from the interpretation made in the earlier decisions by a Smaller Bench, the order which does not conform to the law laid down by the Larger Bench in the later decision which decision would constitute the law of the land and is to be regarded as the law as it always was, unless declared by the court itself to be prospective in operation, would clearly suffer fro....
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....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 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 obje....
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....PC Total Income 2,10,99,67,200 2,11,01,80,030 Tax Liability after relief 53,06,51,890 73,54,23,071 Interest and fee payable 10,000 5,31,67,327 Total Liability 53,06,61,890 78,85,90,398 Total Taxes Paid (Advance Tax, TDS & Self - Assessment Tax) 53,30,75,986 53,30,65,748 Balance Tax Payable / (Refundable) (24,14,100) 25,55,24,650 The difference between the computation of tax as provided by the assessee and as per AO in CPC is on account of computation of tax on total income @ 30% plus surcharge of 12% plus cess instead of applying tax rate u/s.115BAA(5) @ 22% plus surcharge of 10% plus cess. The assessee in return of income specifically mentioned the exercise option u/s.115BBA in the return of income in schedule part 'A', Joint I and also filed Form No.10IC on 29.05.2021 through efiling. The assessee aggrieved by the above charging of tax and denying charging of taxability u/s.115BAA of the Act and charging higher rate of tax filed appeal before CIT(A). 14.1 The CIT(A) uphold the action of AO in charging tax rate @30% and denying the benefit u/s.115BAA(5) of the Act by observing in para 9.6 & 9.7 as under:- ....