2025 (9) TMI 1552

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....of the Act which is hereinafter referred to as the "impugned order". The relevant assessment year is 2019-20 and the corresponding previous year period is from 01.04.2018 to 31.03.2019. 2. Factual Matrix 2.1 That by an intimation order under Section 143(1) of the Act passed by the Assistant Director of Income Tax Act CPC Banaluru for the assessment year 2019-2020 on 27.10.2020 an amount of Rs. 24,16,427/- was disallowed by virtue of provision contained in Section 36(1)(va) of the Act which pertained to sum received from employees as contribution to provided Fund, ESI etc. 2.2 That assessee being aggrieved by the aforesaid intimation order dated 27.10.2020 preferred first appeal under Section 246A before the ld. CIT(A) who by the im....

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....ts 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 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 whil....

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....re enactments. It is upon deposit' in terms of those enactments and on or before the due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated as a deduction. Thus, it is an essential condition for the deduction that such amounts are deposited on or before the due date. If such interpretation were to be adopted, the nonobstante clause under Section 43B or anything 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 ju....