2024 (10) TMI 801

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....he facts of the case and submissions made by the appellant, is bad in law and deserves to be cancelled. 3. In law and in the facts and circumstances in the case of the appellant, the Ld. CIT(A) has grossly erred in upholding adjustment of Rs. 3,34,28,177/- on account of payment of employees' contribution to National Pension Scheme (NPS) under section 36(1)(va) of the Act, made while passing intimation order u/s 143(1) of the act. The Ld. CIT(A) ought to have appreciated that no due date of payment is prescribed for payment of such employees' contribution to NPS and payment has been immediately made by appellant. 4. The appellant craves leave to add to alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal." 3. The brief facts of the case are that the assessee Company initially filed its original return of income on September 25, 2019, and later submitted a revised return on January 1, 2020, declaring a total loss of Rs. (-) 10,06,36,03,425/- under the normal provisions of the Income Tax Act, while also reporting a book profit of Rs. 1,93,74,48,309/- under Section 115JB of the Act. Subsequently, t....

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.... to Sections 43B and 36(1)(va) of the Act. Explanation 5 to Section 43B clarifies that its provisions do not apply to amounts received from employees, and Explanation 2 to Section 36(1)(va) similarly states that Section 43B is irrelevant for determining due dates in this context. The legal language in these Explanations clearly indicates that, so far as employee contributions to PF and ESI is concerned, the provisions of Section 43B "shall not apply and shall be deemed never to have been applied." Further, Ld. CIT(Appeals) observed that the legal definition under Section 2(24)(x) includes employee contributions as part of income, allowing a corresponding deduction when such payments are made. The question then arises whether Section 43B would apply to these employee contributions. A straightforward reading of the relevant sections and the historical context reveals that Section 43B(b) pertains solely to employer contributions, which aligns with the intentions of the Legislature as articulated in the 1983 Finance Bill Memorandum. The memorandum explicitly refers to "employer's contribution" and does not mention "employee contributions", underscoring the intent to exclude the lat....

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....tions were made timely before the specified due date of September 30, 2019. The Counsel for the assessee submitted that CIT(A) failed to appreciate the absence of a due date set by the PFRDA for NPS payments, and thereby erroneously applied principles relevant to PF and ESI contributions. Furthermore, the Counsel for the assessee submitted that the CIT(A) disregarded the evidence and arguments presented during the appeal, which reflects a lack of thorough consideration that is deemed unacceptable in judicial proceedings. Moreover, the Counsel for the assessee relied on favorable rulings ITAT Ahmedabad in other group cases, where employee contributions to NPS were recognized as valid when made before the return filing deadline. The appellant submitted that these precedents demonstrate that the disallowance by the Assessing Officer was unjustified. 6. In response, the Ld. DR during the course of hearing, drew attention of the Bench to Central Civil Services (Implementation of National Pension System) Rules, 2021 on the issue of the date by which employees' contribution NPS has to be deposited. 7. In counter to this contention of the Ld. DR, the Counsel for the assessee repr....

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.... is no due date prescribed in the respective PFRDA Act, 2013 and all the payment has been duly made before filing of the Return of Income as per section 139[1] of the Act. Therefore the amount of Rs. 8,19,544/- is treated to be allowable u/s. 43B[b] of the Act and therefore the addition made by CPC is liable to be deleted. Further we observe when the assessee had replied to the communication to the CPC and explaining the above facts, CPC is not correct in ignoring the reply and making the disallowance in the 143[1] proceedings. Thus the Grounds of Appeal raised by the assessee are hereby allowed. 8. In the result the appeal filed by the assessee is hereby allowed. 9. Again in the case of Adani Hazira Port Ltd. vs. DCIT in ITA No. 25/Ahd/2023 vide order dated 30.07.2024, while dealing with the similar issue, the Tribunal made the following observations: "7. We have given our thoughtful consideration and perused the materials available on record. It is seen from the Return of Income, the assessee made deposit of Rs. 29,85,610/- being Employees contribution under any "other welfare fund" namely National Pension System (NPS). On perusal of the Tax audit report, it ....