TaxTMI 
TaxTMI 
2024 (10) TMI 82
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.... on facts of the case. 2. That the Hon'ble CIT(A), NFAC erred in law as well as on facts of the case by confirming disallowance of Rs. 23,93,177/- of delay in deposit of PF/ESI made by CPC, which was beyond jurisdiction. 3. That the appellant craves to leave, add, amend or adduce any of the grounds of appeal during the course of appellate proceedings." II. ITA No. 1144/Kol/2024 (Assessment Year: 2019-20) 2.1 The grounds of appeal raised by the assessee are reproduced as under: "1. That the order passed u/s 250 is bad in law as well as on facts of the case. 2. That the Hon'ble CIT(A), NFAC erred in law as well as on facts of the case by confirming disallowance of Rs. 29,45,807/- of delay in deposit of PF/ESI made by CPC, which was beyond jurisdiction. 3. That the appellant craves to leave, add, amend or adduce any of the grounds of appeal during the course of appellate proceedings." 3. We would first take up appeal for the Assessment Year 2018-19 which has been preferred by the assessee challenging the separate order, dated 02.04.2024, passed by the Ld. CIT(A) whereby, the Ld. CIT(A) had partly allowed the appeal of the Assessee ....
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....022 wherein it has been held that deduction u/s 36(1)(va) in respect of delayed deposit of amount collected towards employees' contribution to PF cannot be claimed when deposited within the due date of filing of return even when read with Section 43B of the Income-tax Act, 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. The inclusion of a class of receipt, i.e., amounts received (or deducted from the employees) were to be part of the employer/assessee's income. Since these amounts were not....
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....s court was of the opinion that the omission was curative, and that as long as the employer deposited the dues, before filing the return of income tax, the deduction was available. A reading of the judgment in Alom Extrusions, would reveal that this court, did not consider Sections 2(24)(x) and 36(1)(va). Furthermore, the separate provisions in Section 36(1) for employers' contribution and employees' contribution, too went unnoticed. * When Parliament introduced Section 43B, what was on the statute book, was only employer's contribution (Section 36(1)(iv)). At that point in time, there was no question of employee's contribution being considered as part of the employer's earning. On the application of the original principles of law it could have been treated only as receipts not amounting to income. When Parliament introduced the amendments in 1988-89, inserting Section 36(1)(va) and simultaneously inserting the second proviso of Section 43B, its intention was not to treat the disparate nature of the amounts, similarly. As discussed previously, the memorandum introducing the Finance Bill clearly stated that the provisions - especially second proviso to S....
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....rtue 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 obligation of every assessee under Section 43B. * The non-obstante clause in section 43B would not in any manner dilute or override the employer's obligation under section 36(1)(va) to deposit the amounts retained by it or deducted by it from the employee's income, unless the condition that it is deposited on or before the due date, is correct and justified. The non-obstante clause has to be understood in the context of the entire provision of Section 43B which is to ensure timely payment before the returns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interes....