TaxTMI 
TaxTMI 
2023 (5) TMI 1370
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....e of adjustments allowed to be made u/s. 143(1) of the Act. 3. erred in upholding the disallowance made by the CPC, in respect of payment made towards employee's contribution for P.F. and ESIC for the month of June 2018, aggregating to Rs. 7,67,250, despite the fact that the said payment was made within the period specified under relevant laws. 4. erred in upholding the disallowance made u/s. 36(1)(va) of the Act of Rs. 13,21,554 on the basis of disclosure made in tax audit report, without appreciating the fact that in the tax audit report, total payments made, after 15th day of month in which contribution was due, was disclosed at Rs. 12,47,865." 2. Briefly stated facts necessary for consideration and adjudication of the issues at hand are: the return of income filed by the assessee company for the year under consideration claiming deduction to the tune of Rs. 13,21,554/- being employee's contribution of ESIC & PF, was processed u/s 143(1) read with Section 154 of the Income Tax Act, 1961 (for short "the Act") by making disallowance of deduction claimed by the assessee on account of delay in depositing employee's contribution of PF & ESIC prescribed under ....
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....ter the due date prescribed under the relevant Act by relying upon the provisions contained under section 36(1)(va) and 43B of the Act having been amended vide Finance Act, 2021 wherein explanation 2 and explanation 5 have been inserted. 9. However, now the issue raised before the Bench is: "as to whether payment by the employers qua PF contribution of employees after due date prescribed under the relevant Act is an allowable deduction under section 36(1)(va) read with section 43B"? has been decided against the assessee by the Hon'ble Supreme Court in case of Checkmate Services P. Ltd. vs. CIT (supra), the operative findings of the Hon'ble Supreme Court are as under: "51. The analysis of the various judgments cited on behalf of the assessee i.e., Commissioner of Income-Tax v. Aimil Ltd; Commissioner of Income-Tax and another v. Sabari Enterprises; Commissioner of Income Tax v. Pamwi Tissues Ltd.; Commissioner of Income-Tax, Udaipur v. Udaipur Dugdh Utpadak Sahakari Sandh Ltd. and Nipso Polyfabriks (supra) would reveal that in all these cases, the High Courts principally relied upon omission of second proviso to Section 43B (b). No doubt, many of thes....
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.... 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 objective of Section 43B is to ensure that if assessees are following the mercantile method of accounting, nevertheless, the deduction of such liabilities, based only on book entries, would not be given. To pass muster, actual payments were a necessary pre-condition for allowing 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 3....
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....g 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. 55. In the light of the above reasoning, this court is of the opinion that there is no infirmity in the approach of the impugned judgment. The decisions of the other High Courts, holding to the contrary, do not lay down the correct law. For these reasons, this court does not find any reason to interfere with the impugned judgment. The appeals are accordingly dismissed." 10. We are of the considered view that when the issue in question has been settled by the Hon'ble Supreme Court of India in case of Checkmate Services Pvt. Ltd. (supra) once for all the case law relied upon by the assessee is not applicable to the facts and circumstances of the case. Moreover, when the assessee has apparently made incorrect claim in its return of income which is against the provisions contained under PF & ESIC as to depositing the employees' contribution on account of PF & ESIC within a particular time frame, any deposit thereafter would not be entitled for deductions as has been held by the Hon'ble ....
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....day. 16. For facilities of reference Circular No. 676 dated 14.01.1994 and Section 10 General Clause Act, 1897 is extracted as under:- "Circular No. 676 dated 14.01.1994, CBDT 1197. Whether, in case last day for payment of any instalment of advance tax is day on which receiving bank is closed, assessee can make payment on next immediately following working day, and in such cases mandatory interest leviable under sections 234B and 234C would not be charged 1. Representations have been received by the Board seeking waiver of interest chargeable under sections 234B and 234C of the In-come-tax Act, 1961 for default in payment of instalments of ad-vance tax by the due dates which are prescribed under section 211 of the Income-tax Act. In cases where the last date for making payment of such instalments (i.e., 15th September, 15th December and 15th March) happens to be a holiday and the assessee pays the due amount of advance tax on the next working day. 2. The matter has been carefully considered by the Board and it is felt that in such cases section 10 of the General Clauses Act, 1897 will be applicable. This section lays down that where any Act or....
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....or allowed to be done or taken in any Court or office on a certain day or within a prescribed period, then, if the Court or office is closed on that day or the last of the prescribed period, the Act or proceedings shall be considered as done or taken in due time if it is done or taken on the next day afterwards on which the Court or office is open." This proposition of law applies by Central Act and Regulation made on or after 14.01.1877. 19. In view of the matter, by applying the provisions contained u/s 10 of the General Clauses to the facts and circumstances of the case, we are of the considered view that payment of Rs.76,7,250/- made by the assessee on 16.07.2018 qua year under consideration is to be taken within time as there was no unjust enrichment of the assessee nor there was any malafide on its part to misappropriate the employee's contribution of PF & ESI rather deposited the same on the very next day of opening the banks, the 15.07.2018 being Sunday. 20. Resultantly, the appeal filed by the assessee is partly allowed, however, subject to the verification of the payment sought to be made by the assessee with in time with one day delay due to Sunday on 15.07.2018. ....