ALAKNANDA ASSOCIATES,MEERUT V. ITO,WARD-1(1)(4), MEERUT

ITA 4502/DEL/2024

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The case involves Alaknanda Associates appealing against the order of the Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, which upheld the addition of Rs.84,88,580 made by the Assessing Officer for late payment of employees' contributions to PF and ESIC. The Tribunal noted that the issue was covered by the Supreme Court's decision in Checkmate Services Pvt. Ltd. vs. CIT. However, it also recognized that the contributions were actually deposited within the due dates as per the employees' salary disbursement. The Tribunal decided to remit the matter back to the Assessing Officer to ascertain the correct due date for the remittance of these contributions.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474574 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2019-2020
• Other Referred Cases: Checkmate Services Pvt. Ltd. vs. CIT, Sentinel Consultants Pvt. Ltd. Vs. ACIT, Weather Comfort Engineers Private Limited vs. ACIT-CPC, Benson Movers Pvt. Ltd., Kanoi Paper and Industries Ltd. vs. ACIT, B. L. Kashyap & Sons Ltd., VVDN Technologies Pvt. Ltd., Pr.CIT vs. Khyati Realtors (P) Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJAY KUMAR
• Keywords: Opportunity of being heard; Capital expenditure
• Section: 250; 143(1); 37; 37(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘SMC’: NEW DELHI BEFORE SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA No.4502/DEL/2024 (Assessment Year: 2019-20) Alaknanda Associates, vs. Asstt. Director of Income-tax, 00, Shivam Complex, CPC. Nateshpuram, Kanker Khera, Meerut – 250 001. (PAN : AAOFM3000C) (APPELLANT) (RESPONDENT) ASSESSEE BY : None REVENUE BY : Shri Sanjay Kumar, Sr. DR Date of Hearing : 12.03.2025 Date of Order : 12.03.2025 O R D E R The assessee has filed appeal against the order of the Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi (for short ‘ld. CIT (A)’) dated 10.08.2023 for AY 2012-13. 2. None appeared on behalf of the assessee from the date of first posting on 18.02.2024 and subsequently the matter was fixed for 12.03.2025 but none appeared on behalf of the assessee. I proceeded to adjudicate the issue with the assistance of ld. DR of the Revenue. 2 ITA No.4502/DEL/2024 3. The only issue involved in this appeal is that the ld. CIT (A) has erred in upholding the addition of Rs.84,88,580/- made by the Assessing Officer on account of late payment of employees’ contribution of PF and ESIC. 4. At the time of hearing, we observed that the ld. CIT (A) decided the issue relying on the decision of Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. vs. CIT in Civil Appeal No.2833 of 2016 and the ld. DR for the Revenue also submitted that the issue is squarely covered against the assessee by the decision of Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. vs. CIT 143 taxmann.com 178. 5. Considered the submissions of the ld. DR of the Revenue and material placed on record. In our considered view, this issue is already settled in favour of the Department Accordingly, this plea of the assessee is rejected. 6. However, we also observed that the issue is decided without appreciating the fact that employees contribution to PF and ESI are recovered from the employees on disbursement of salary and wages. Accordingly, due date for deposit of employees contribution to PF and ESI i.e. within 15 days of the following month during which salary and wages was actually disbursed among the employees, thus it is observed that employees contribution to PF and ESI was actually deposited on or before 15th of the following month in which salary and wages actually disbursed. Coming to this alternative plea which was considered by the coordinate Bench in the case of Benson Movers Pvt. Ltd. 3 ITA No.4502/DEL/2024 passed in ITA No. 2710/Del/2022 for assessment year 2019-20 and the relevant decision of the coordinate Bench is as under :- “5. In so far as employees contributions towards PF & ESI it is noticed that the issue as to whether the due date under PF/ESI Acts should be as per the calendar month for which the salary is payable or from the month in which the salary is paid to the employee by the employer came up for adjudication in the case of Sentinel Consultants Pvt. Ltd. Vs. ACIT (supra) and the Tribunal restored the issue to the file of the AO with the following observations:- “9. We have carefully considered the rival submissions and perused the material available on record. The disallowance of employees’ contribution to PF/ESIC for breach of condition under Section 36(1)(va) is in controversy. 9.1 We notice at the outset that an opportunity was given via electronic platform of the deptt. For the proposed adjustments and in the absence of e- response, the adjustments were carried out the CPC- Bangluru and intimation was issued enhancing the assessed income in the captioned assessment years. The CIT(A) in the first appeal has sustained the adjustments towards belated deposits of employees’ contribution to PF/ESIC in the light of the judgment rendered by the Hon’ble Supreme Court in Checkmate Pvt. Ltd. vs. CIT (2022) 143 taxmann.com 178 (SC). The contention of the Assessee that such additions cannot be made under the umbrella of S. 143(1) is covered against the assessee the decision of the co- ordinate bench in the case of Weather Comfort Engineers Private Limited vs. ACIT-CPC ITA No. 959/Del/2021 order dated 15/02/2023. The action of CPC and CIT(A) thus cannot be faulted where some opportunity was admittedly given for e- response. 9.2 We now turn to alternate plea on behalf of the assessee for grant of deduction under general provisions for deduction of expenditure under S. 37 of 4 ITA No.4502/DEL/2024 the Act. We do not see any merit in such plea that the belated deposit of employees contributions to PF/ESIC governed under Section 36(1)(va) is also simultaneously amenable to deduction under Section 37(1) of the Act. In terms of the provision, Section 37(1) permits deduction of expenditure which is not in the nature of expenditure prescribed in Sections 30 to 36 of the Act and also not being in the nature of capital expenditure or personal expenses of the assessee. Thus, in view of such mandate of law, the deduction of expenditure under the general clause of Section 37(1) would not extend to expenditure specially covered within the ambit of Section 36(1)(va) of the Act. The Hon’ble Supreme Court in the case of Checkmate Pvt. Ltd. (supra) itself explains this position in Para 32 of the Judgment. Such view also draws support from the observations made in recent judgment of the Hon’ble Supreme Court in the case of Pr.CIT vs. Khyati Realtors (P) Ltd. (2022) 141 taxmann.com 461 (SC). The alternate plea is thus without any merit. 9.3 We also take note of yet another plea made out on behalf the assessee towards methodology of calculation of default under the relevant PF/ESIC Act. The Ld. Counsel contends that the month during which the disbursement of salary is actually made would be relevant for the purposes of determination of due date of deposit under the respective statute. The accrual of liability towards payment of salary without actual disbursement would not fasten obligation for deposits of employees contribution in the labour Acts per se. as observed by the co-ordinate bench in Kanoi Paper and Industries Ltd. vs. ACIT (2002) 75 TTJ 448 (Cal). This aspect has not been found to be examined by the Assessing Officer or CIT (A). Hence without expressing any opinion on merits on this aspect, we deem it expedient to restore the matter to the file of designated AO. It shall be open to the assessee to place factual matrix before the AO and take such plea for evaluation of the AO. The AO shall examine this 5 ITA No.4502/DEL/2024 aspect and fresh order in accordance with law after giving proper opportunity.” 6. We find similar view has been taken by the co- ordinate benches in the cases of B. L. Kashyap & Sons Ltd. (supra) and VVDN Technologies Pvt. Ltd. (supra). The ld. Counsel submits that in view of these decisions the matter may be restored to the Assessing Officer to ascertain the due date for remittance of the PF/ESI contributions of employees. Considering the decisions of the coordinate benches referred to above we restore this issue to the file of the Assessing Officer to decide in the light of the observations made by the Tribunal in the case of Kanoi Paper & Industries Ltd. Vs. ACIT (supra). Needless to say that the Assessing Officer shall provide adequate opportunity of being heard to the assessee and the assessee is at liberty to provide all the necessary information in support of its contention.” 7. Since the above issue is squarely covered by the above decision, we are inclined to remit the issue back to the file of AO to consider the alternative plea of the assessee as per law after giving proper opportunity of being heard to the assessee. Accordingly, this appeal is partly allowed for statistical purposes. 8. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open court on this 12th day of March, 2025. Sd/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER Dated: 12.03.2025 TS 6 ITA No.4502/DEL/2024 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals). 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "