2023 (2) TMI 1325

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... appeal:- "1 On the facts and circumstances of the case National Faceless Appeal Centre [NFAC], New Delhi has erred in confirming the disallowance of Rs. 4,64,014/- on account of employees' contribution of Provident Fund deposited late by invoking the provisions of Section 36(1)(va) 2. On the facts and circumstances of the case National Faceless Appeal Centre [NFAC], New Delhi has erred in not following the binding decision of Hon'ble Jurisdictional Income Tax Appellate Tribunal, Indore Bench decision in the case of M/s Industrial Filters and Fabrics Pvt. Ltd., Indore vs ACIT 52 ITA No. 961/Ind/2012. Total Tax Effect Rs. 1,44,771/-" 3.The brief facts of the case are that the assessee is a partnership fi....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....or the removal of doubts, it is hereby clarified that the provisions of this section shall not apply and shall be deemed never to have been applied to a sum received by the assesses from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 applies." (xii) Hence, there is no ambiguity in the provisions of section 36(1 )(va) and section 2(24)(x) of the Act, and the recent amendment after passing of the Finance Act 2021, has only clarified the issue that definition of due dates as per Sec 43B is deemed never to have been applied for the purpose of Employees Contribution. Therefore, the payment of employees contribution made after the due date, by which the appellant is required as an employer to c....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....debatable and accordingly could not be the subject matter of disallowance under section 143(1) of the Act. In response, DR relied upon the observations made by the Ld. CIT(Appeals) in the appellate order. 6. We have heard the rival contentions and perused the material on record. Regarding the argument that the auditors did not specifically mention in the audit report regarding inadmissibility of claim with respect to contributions received from the employees for various funds as referred to in section 36(1)(va) of the Act, it would be useful to reproduce section 143(1) of the Act, which reads as under: Assessment. 143. (1) Where a return has been made under section 139, or in response to a notice under sub-section (1) o....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e and all that is required under section 143(1) of the Act is that disallowance of such expenditure should be "indicated in the audit report". Now, on going through the specific clauses of the Tax Auditors Report in Form Number 3CD issued under section 44AB of the Act, we observe that serial number 20(b) of Form Number 3CD, which is specific to allowability of claim of deduction u/s 36(1)(va) of the Act, does not require the auditor to make any specific observation regarding admissibility of the amount under section 36(1)(va) of the Act. At the same time, when we observe several other parts of the tax audit report viz. serial number 21(b)-amounts inadmissible under section 40(a), serial number 21(c)-amounts inadmissible under section 40(b)/....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....reme Court held that for assessment years prior to AY 2021-22, non obstante clause under section 43B could not apply in case of amounts which were held in trust as was case of employee's contribution which were deducted from their income and was held in trust by assessee-employer as per section 2(24)(x), thus, said clause would not absolve assessee-employer from its liability to deposit employee's contribution on or before due date as a condition for deduction. The Supreme Court observed that there is a marked difference between nature and character of assessee-employer's contribution and amounts retained by assessee from out of employee's income by way of deduction wherein one is liability to be paid by employer and second ....