AI Insights
The case involves three appeals filed by Calibehr Business Support Services Pvt. Ltd. against the orders of the National Faceless Appeal Center (NFAC), Delhi, for the assessment years 2018-19, 2019-20, and 2020-21. The primary issues in the appeals included the disallowance of gratuity provisions, employee contributions to welfare funds, and the non-granting of TDS credit following the amalgamation of companies. The Tribunal examined the legal and factual basis of each issue, considering the submissions of both the assessee and the revenue, along with relevant judicial decisions and statutory provisions.
Appeal Details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 125575 (ITAT-NA)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
5 month(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
25-06-2023
Appeal Filed By
Assessee
Order Result
PartlyAllowed
Bench Allotted
Mumbai
Next Hearing Date
11-06-2023
Assessment Year
2020-2021
Appeal Filed On
24-01-2023
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI VIKAS AWASTHY, JM AND SHRI PRASHANT MAHARISHI, AM ITA No. 3227/MUM/2022 (Assess me nt Year 2018-19) ITA No. 257/MUM/2023 (Assess ment Ye ar 2019-20) ITA No. 256/MUM/2023 (Assess ment Year 2020-21) Calibehr B usiness Support Services Pvt.Lt d. Ground Fl oor, Sha h Industrial Estate, Saki Vihar R oad, Andheri East, Mu mbai-400072 Vs. AO, National E-Assess me nt Centre/ ACI T Cir 1( 2)( 1)M u mbai National E-Assessme nt Centre Del hi/ Aa yakar Bha van, Maha rishi Karve ma r g, Mu mbai-400020 (Appellant) (Respondent) PAN No. AADCP9748A Assessee by : Shri. Nitesh Joshi, AR Revenue by : Ms. Agnes P. Thoma s, DR Dat e of hearing: 12. 06.2023 Date of pronouncement : 26.06.2023 O R D E R PER PRASHANT MAHARISHI, AM: 01. These are three appeals filed by Calibehr Business Support Services Pvt. Ltd. (“Assessee/Appellant”) for assessment years 2018-19, 2019-20 and 2020-21. Page | 2 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. ITA No. 3227/MUM/2022 AY 2018-19 02. ITA No. 3227/Mum/2022 is filed by assessee for assessment year 2018-19 against the appellate order passed by the National Faceless Appeal Center (NFAC), Delhi, (“the Ld. Appellate Authority”/ “the CIT(A)”) dated 27.10.2022 raising the following grounds of appeal. 1. The Ld. Commissioner of Income-tax (Appeals) erred in upholding the additions made by the Assessing Officer by not adjudicating on the grounds of appeal raised by the appellant, on merits. 2. The Ld. Commissioner of Income-tax (Appeals) erred in upholding the disallowance of Rs. 1,87,97,100/-, being provision for Gratuity under Section 40A(7), without appreciating the fact that the same has been disallowed in the return of income. 3. The Ld. Commissioner of Income-tax (Appeals) erred in upholding the disallowance of Rs. 2,85,74,826/-, being payment of Employee's contribution to Employee Welfare Funds made beyond the 'due date' prescribed under the relevant statutes. 4. The Ld. Commissioner of Income-tax (Appeals) erred in disallowing set-off unabsorbed depreciation of Rs. 22,82,480/- brought forward from earlier years. 5. The Ld. Commissioner of Income-tax (Appeals) erred in not directing the Assessing Officer to grant credit of TDS of Rs. 9,30,493/- of two companies, which had amalgamated with the appellant w.e.f. 01.04.2017 Page | 3 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. without appreciating the fact that the corresponding income was offered to tax by the appellant. 02. Brief facts of the case shows that by the appellate order, the Ld. CIT(A) dismissed the appeal of the assessee against assessment order passed u/s 143(3) of the Income Tax Act, 1961 (“the Act”) dated 24.03.2021 by National E Assessment Center, Delhi (”the Ld. AO”). 03. Assessee is a company engaged in the business process outsourcing services rendering to software development services, other IT unable services. Assessee filed its return of income on 31.10.2018 declaring total income of ₹69,80,460/- as per the normal computation of total income and offered book profit at ₹ 4,55,00,692/- u/s 115JB of the Act. This return of income was processed u/s 143(1) on 06.02.2022 by passing an intimation determining total income at ₹5,48,52,350/- the book profit remained unchanged. 05. The intimation contended following addition/disallowance i. The disallowance of employee‟s contribution to provident fund ESIC and Labor Fund paid beyond due date prescribed under respective Act of ₹ 2,85,74,826/-. ii. The disallowance of provisions for payment for gratuity of ₹1,87,97,100/-. iii. disallowance u/s 40 a (ia) for ₹23,400/- on account of non-deduction tax at source and iv. disallowance u/s 43(B) of ₹ 4,76,564/-. 06. After the intimation the return of assessee was picked up for complete scrutiny assessment under the E assessment scheme 2019 on six different issues. Namely, Page | 4 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. (i) expenditure of personal venture, (ii) refund claim, (iii) share premium, (iv) unsecured loans, (v) disallowance under section 40 A (7) gratuity provision, (vi) Reduction from total income under chapter VI A. 07. Consequent to that the Ld. AO noted that after taking into account all relevant material on records no modification to the income determine u/s 143(1) has been made and accordingly the total income was assessed at ₹69,80,460/-. Thus all the addition made by the Ld. CPC while making the intimation u/s 143(1) were also retained in the assessment order but there was no discussion about the same. 08. Assessee aggrieved with the assessment order preferred appeal before the appellate authority. It was contested that i. Adjustment made u/s 143(1) were retained by the AO without considering submission of the assessee. ii. Provision of payment of gratuity amounting to ₹ 1,87,97,100/- was already disallowed by the assessee at the time of filing of return of income and therefore it has resulted into double disallowance. iii. With respect to the disallowance of employee‟s contribution to provident fund etc. paid beyond due date specified with respective act has already been deposited by assessee before due date of filing of the return and therefore the above disallowance should also not be made. Page | 5 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. iv. it has filed the rectification application on 13.10.2022 which is pending v. raised a new claim that it has claimed set off of unabsorbed losses short by 22,82,480/- for which also rectification application is filed vi. Assessee also made claim that there is a reorganization scheme of amalgamation with effective date of 01.04.2017 wherein two different companies amalgamated with the assessee company and accordingly tax deduction at source of ₹ 9,30,04,093/- claimed by the assessee in its return of income of the amalgamating companies was not given credit. 09. The Ld. CIT(A) after considering the explanation of the assessee categorically held that (i) Against the adjustment made u/s 143(1) the assessee has filed an application u/s 154 of the act on 13.10.2022, which is pending and meanwhile without making any further addition the assessment order u/s 143(3) was passed. (ii) There are no new additions made in the order u/s 143(3), but income of the assessee has been computed taking that income assessed as starting point of computation of income. (iii) intimation issued u/s 143(1) is a separately appealable order u/s 246A as the issues raised in the appeal were arising from intimation u/s 143(1), the only possible course of action available to the assessee other than section 144 was to object the intimation u/s 143(1) by filing the appeal u/s 246A of the Act. Page | 6 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. (iv) Considering the doctrine of merger that issues those were subject matter of prima fascia adjustment u/s 143(1) cannot be challenged by the assessee through appeal before him against the order u/s 143(3) of the Act. (v) With respect to the TDS adjustment the ld. CIT(A) referred to the provisions of section 199 read with rule 37BA(2), rejected the contention of the assessee stating that the dedicator has to file the necessary details and in the absence of the same credit cannot be allowed. Accordingly, the appeal of the assessee was dismissed. 10. Assessee is now aggrieved with appellate order and has filed this appeal. On the earlier date of hearing on 23.03.2023, it was submission of the assessee that the appeal against intimation u/s 143(1) is filed before CIT(A) with request in condonation of delay and therefore this appeal cannot be decided as it is appeal against the order u/s 143(3) of the Act where the computation made by the ld AO started from the income determined u/s 143 (1) of The Act. However, on this date of hearing, the Ld. Authorized Representative categorically stated that this appeal can be heard independent of decision of ld. CIT (A) against appeal against intimation of 143(1) of the act. The Ld. DR did not object to the same and therefore we proceed to decide issues as per the grounds of appeal mentioned in the memorandum of appeal. 11. During the Course of hearing assessee has filed additional grounds of appeal on 09.06.2023 with respect to deduction u/s 80 JJA of the Act as under: Page | 7 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. “1. With to the above appeal filed by us on 23 December 2022 and fixed for hearing before ITAT Bench "C" on June 2023, we are enclosing herewith "Additional Grounds" of appeal in triplicate. 2. The additional ground deals with revised claim of deduction under Section 80JJAA of the Act due to an inadvertent error made by the Company at the time of filing the return of income. 3. For AY 2018-19, the Appellant made a claim of Rs. 5,76,32,4-40/- under Section 80JJAA of the Act in the return of income. The Appellant, vide the additional grounds, is now seeking to make a revised claim of deduction of Rs. 9,10,21,434/- under Section 80JJAA of the Act. 4. As per the provisions of Section 80JJAA of the Act, 30% of additional employee cost incurred during the year can be claimed for each year for period of three Assessment Years, including the year in which the additional employee cost is incurred. However, as per the Format of Form 10DA notified by the Income-tax Department for the relevant Assessment Year, there was no field for stating the amount of deduction allowable in respect of deduction claimed in earlier two preceding years. Accordingly, Form 10DA filed for AY 2018-19 stated an amount of Rs. 5,76,32,440/- representing deduction allowable in respect of additional employee cost incurred for the previous year relevant to AY 2018-19. Based on Form 10DA, the Page | 8 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. Appellant claimed the said amount as a deduction in the return of income which was accepted by the Assessing Officer. 5. It is submitted that due to an inadvertent error, the deduction of additional employee cost incurred of Rs. 3,33,88,994/- relating to AY 2017-18 was inadvertently not claimed in the return of income. Accordingly, the Appellant would be entitled to claim a deduction of Rs. 9,10,21,434/- under Section 80JJAA of the Act. 6. The issue raised in the aforesaid "Additional Grounds" is purely a legal issue. The facts relevant to the additional grounds form part of the record and no new facts are required to be investigated. This specific issue was brought to the attention of the Appellant only when a query was raised by the counsel appearing on behalf of the Company and hence this issue was not raised in the original grounds of appeal before the Income-tax Appellate Tribunal and before the Ld. Commissioner of Income-tax (Appeals). Additional Grounds of appeal AY 2018-19 1. The Assessing Officer and Ld. Commissioner of Income-tax (Appeals) erred in restricting the deduction under Section 80JJAA of the Act to Rs. 5,76,32,440/- instead of correct amount of deduction of Rs. 9,10,21,434/-. 2. The Appellant craves leave to add to, alter or delete the grounds of appeal.” Page | 9 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. 12. Further the assessee has also made prayer for admission of additional evidence vide letter on 22.03.2023 this is as under: “With reference to the above appeal filed by us on 23rd December 2022 and fixed for hearing before ITAT Bench "C" on 23rd March 2023, we submit as under: 1. In connection with the grounds of appeal raised before the Hon'ble Tribunal, a Paper book comprising of 363 pages is enclosed herewith. 2. It is submitted that the following documents at Page 236-363 of the above- mentioned Paper book were not filed before the lower authorities i.e. the Assessing Officer and Ld. Commissioner of Income tax (Appeals): i. Writ Petition dated 5th March 2019 filed by the Indian Staffing Federation before the Hon'ble Delhi High Court (Page 236-359 of the Paper book) ii. Order dated 9th January 2020 passed by the Hon'ble Delhi High Court in respect of the above-mentioned Writ Petition No. 3051/2019 (Page 360-363 of the Paperbook) 3. The above-mentioned documents relate to Ground No. 3 of the appeal filed in Form 36 dealing with the disallowance of employee's contribution to Provident Fund/ESIC and Labour Welfare Fund aggregating to Rs. 2,85,74,826/-. 4. It is submitted that during the course of scrutiny assessment proceedings, the Appellant was required to Page | 10 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. furnish documents relating to payment of employee's contribution to the above-mentioned funds and the same were e-filed before the Assessing Officer vide letter dated 30th January 2020. Thereafter, without any further query, the Assessing Officer made the addition of Rs. 2,85,74,826/- on the basis of the intimation issued u/s. 143(1) of the Act. 5. The Appellant filed an appeal against the assessment order passed u/s. 143(3) of the Act before the Ld. CIT(Appeals). The Appellant uploaded written submission and paper book on 22nd September 2022 in response to the notice of hearing dated 7 September 2022. The Appellant was of the view that the issue involved stood settled by a catena of decisions in favour of the appellant and in view of the facts already placed on record, no additional documents were required to be filed before the Ld. CIT(Appeals). The Appellant had also sought for a hearing through Video Conferencing while uploading the written submissions. However, the Id. CIT(Appeals), without providing any opportunity of Video Conferencing, dismissed the appeal on a technical ground, without adjudicating the issue on merits. 6. It is submitted that the addition has been confirmed without providing sufficient opportunity to the Appellant. In view of the above facts and circumstances, it is prayed that the additional evidences being filed before the Honb'le Tribunal be admitted in Page | 11 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. accordance with Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963. 7. It is submitted that the rules framed for admission of additional evidence are the procedural rules and the same should be construed liberally. In the process of justice, technical consideration should not be given over-weight. In this regard, we rely upon the decision of Hon'ble Supreme Court in the case of Collector Land Acquisition v. MST Katiji & Ors. [167 ITR 471] wherein it has been held that when substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred as the other side cannot claim to have a vested right in injustice being done because of a non-deliberate delay. In the said decision, where the issue of condonation of delay was decided, it was held that refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. Applying the same principles to the above issue, if the additional evidence is admitted, the highest that can happen is that the case will be decided on merit. 8. The appellant prays that the above mentioned additional evidences may kindly be admitted and considered before disposing of the present appeal.” Page | 12 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. 13. Assessee has also filed the paper book containing 363 pages. 14. On 22-03.2023 further additional ground was filed challenging the intimation passed u/s 143(1) of the Act as under: “Appeal No. ITA 3227/Mum/2022 Assessment Year 2018-19 With reference to the above appeal filed by us on 23rd December 2022 and fixed for hearing before ITAT Bench "C" on 23rd March 2023, we are enclosing herewith "Additional Grounds" of appeal in triplicate. It is submitted that the issue raised in the aforesaid "Additional Grounds" is purely a legal issue. The facts relevant to the additional grounds form part of the record and no new facts are required to be investigated. This specific issue was inadvertently missed in the original appeal. In view of the above facts, we request you to kindly admit the "Additional Grounds" to be heard along with other Grounds raised in the Appeal filed on 23rd December 2022. Additional Grounds of appeal 1. That the assessing officer erred in referring to and relying upon the adjustments made and consequent income determined vide intimation passed under section 143(1) of the act, when the said intimation was invalid, as it could not have been issued after the issuance of he notice under section 143(2) of the Act. 2. That consequent to the above, the income as determined in the assessment order passed under section 143(3) of the Act Page | 13 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. would not survive and the Appellant has to be assessed based on the income as returned. 15. The time of hearing, the learned authorized representative requested that the matter be set-aside to the file of the learned assessing officer without discussing the issue on the merit leaving all the arguments open to be adjudicated by the learned assessing officer. The reason mainly given by the learned authorized representative is that the learned assessing officer has computed the assessment of the income at the same figure. He submitted that the learned assessing officer has confirmed the addition as made in the intimation under section 143 (1) of the act. 16. On the ground no 3 where in the disallowance of Rs 2,85,74,826/- is contested on account of late deposit of employees contribution of P F he referred to the additional evidences submitted before us stating that there is a writ petition filed by the Indian staffing Federation before the honourable Delhi High Court which is placed at page number 236 – 359 of the paper book with respect to the new system of universal account number is created and therefore employers found it difficult to deposit the provident fund contribution of the employees for the several reasons mentioned in number (d) at page number 11 stating that the members of the petitioner Association who are ready and willing to make the remittance of the contribution unable so to do and have been stayed to face prosecution under the act. He therefore submitted that for these reasons the provident fund of the employee's contribution was delayed beyond the due date prescribed of the provident fund act. It was further the argument that the provident fund due date is required to be considered from the 'date of payment of the wages Page | 14 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. and not from the end of the month in which the salary or wages become due. For this proposition assessee relied upon the decision of the coordinate bench The Master Polishers, ITA No. 252/MUM/2023 Assessment Year: 2020-21 dated 26/04/2023 where in after extensively quoting decision of Kanoi Paper & Industries Ltd. vs. Asstt. CIT on 28 May, 2001 (2002) 75 TTJ Cal 448 where in it held that :- "6. Clause 38 of the Employees' Provident Fund Scheme, 1952, fixes the time limit for making payment in respect of contribution to the provident fund to be 15 days from the close of the month concerned. However, the issue here is whether the "month" should be considered to be the month to which the wages relates or the month in which the actual disbursement of the wages is made, we are of the considered opinion that the expression "month" should mean here the month during which the wages/salary is actually disbursed irrespective of month to which the same relates. Thus, the scheme of the government in this regard is that once a deduction is made in respect of the employees' contribution to the provident fund from the salary/wages of the employee or the employer also makes his contribution, factually at the time of disbursement of the salary the payment in respect of such contribution should be made forthwith. If for some reason or other the payment of salary for a particular month be held up for considerable period of time it cannot be said Page | 15 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. that the employer would be liable to make payments in respect of the "employer's" as well as "employees" contribution in respect of wages for such period within a period of 15 days from the close of the month to which the wages relates. On the other hand, in our view, most appropriate interpretation would be that the employer would be at liberty to make payment of the contribution concerned within 15 days (subject however to the further grace period) from the end of the month during which the disbursement of the salary is actually made and the contribution of the, provident fund are, thus, generated, inasmuch as, the provision relating to the disallowance of such contribution on account of delay is rather an artificial provision. In our view, a liberal approach has got to be made to this issue. Ultimately, therefore, we reverse the order of the lower authorities and direct the assessing officer to examine whether the payments of contribution in the present case were made within 15 days (allowed with further grace period of 5 days) from the close of the respective months during which the disbursement of the salary/wages were actually made. The assessing officer should recompute the amount disallowable, if any, on the above basis and take appropriate action accordingly." 17. Thus, it was contended that Section 38 of the provident fund act specifically says that the due date of deposit of PF is to be counted Page | 16 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. form the date in which salary is paid. Thus, Ground no 3 may be considered and be set aside to the file of the LD AO for deciding afresh in view of above submission. 18. Ground number 2 of the appeal is against the disallowance of ₹ 18,797,100/- being provision for Gratuity under section 40A (7) without appreciating the fact that the same has been disallowed in the return of income. He referred to letter dated1/12/2020 placed at page number 195 – 207 of the paper book wherein the revised computation of income and details of provision for gratuity is furnished. According to that letter at page number 207 it is submitted that employer's contribution to gratuity fund not paid within the due date is Rs. 2,00,65,655 out of which paid during the year is 1,268,555/-and therefore there is a net disallowance of ₹ 18,797,100/– and therefore it has been already disallowed in the computation and disallowance made by the learned assessing officer is double disallowance. 19. As per ground number 4 of the appeal, assessee is aggrieved with not allowing set off unabsorbed depreciation of ₹ 2,282,480 and further as per ground number 5 the learned assessing officer has not granted credit for tax deduction at source of ₹930,493/- of 2 companies which had amalgamated with the appellant with effect from 1 April 2017. The learned authorized representative submitted that the AO may be directed to grant credit of such TDS and set of the unabsorbed depreciation. 20. With respect to the additional ground of appeal for deduction under section 80 JJA of the act, assessee submitted that assessee is eligible for deduction of ₹ 9,10,21,434 which was originally claimed by the assessee for ₹ 57,632,440 it was the claim of the assessee is that Page | 17 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. assessee is also eligible for 30% of additional employee cost incurred during the year for a period of three assessment year but as perform number 10 DA there was no field for stating the amount of deduction allowable in respect of deduction claimed in earlier to preceding years. Therefore the assessee filed form number 10 DA for assessment year 2018 – 19 showing deduction of only ₹ 57,632,440. In the computation of total income, assessee also claimed the same deduction, which resulted into the deduction in the return of income also. Therefore, assessee is further entitled to deduction of ₹ 33,388,994/- relating to assessment year 2017 – 18 was inadvertently not claimed. Therefore, the assessee should have been granted this deduction. The fact also shows that this enhanced deduction was not claimed in the return of income, not claimed before the learned CIT – A also but before us only. The learned authorized representative was of the view that this deduction should be granted to the assessee as it is in accordance with the law and the issue to be set-aside to the learned assessing officer with a direction to grant the above deduction to the extent of ₹ 91,021,434/- 21. The learned departmental representative vehemently supported the orders of the learned CIT – A and the AO. He submitted that: i. In this assessment order there is no addition made by the learned assessing officers, which are contested by the grounds of appeal. ii. The learned assessing officer has not made any addition/disallowance, therefore the appeal of the assessee has rightly been decided by the learned CIT-A Page | 18 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. iii. All the disallowances are made in the intimation passed under section 143 (1) of the act. Therefore, the assessee should have contested that intimation in appeal . iv. Now assessee cannot in this appeal contest that those additions which have become final under intimation under section 143 (1) of the act. v. With respect to the additional ground of appeal, it was submitted that the assessee should have claimed the correct deduction under section 80 JJA of the act. The deduction claimed in the return of income is allowable, now deduction which is not been claimed in the return of income and also not specified in the auditor's report in form number 10 DA of the act cannot be allowed to the assessee. 22. We have carefully considered the rival contentions and perused the orders of the lower authorities. This is in appeal against the appellate order passed by the learned CIT – A wherein order passed by the learned assessing officer under section 143 (3) read with section 143 (3A) and 143 (3B of the income tax act was under challenge. Therefore, the grievance of the assessee should emanate from the assessment order and also should be decided in the appellate order or should be subject matter of the assessment. Appeal before us is required to be decided as per the mandate of section 254(1) of the act where it is pro vides that Tribunal is required to pass an order as it thinks fit. We are mandated to give reason for our decision also. Therefore, even if the parties desire that we set aside the issue back to the file of the lower authorities, we are duty bound to give reason for the same. Therefore we Page | 19 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. proceed to decide this appeal as per mandate of section 254 (1) of the Act. 23. Some facts are required to be looked in to decide this appeal :- i. Assessee filed its ROI on 31/10/2018 at Rs. 69,80,460/-. It is placed at paper book page no 1 in ITR -6. . ii. As per ROI, No disallowance u/s 40 as per serial no 8 of ITR -6 acknowledgements was offered. (ITR 6 page 30). iii. Complete ITR is not filed by assessee as page no 1 to 29 of ITR 6 are not filed. iv. In tax audit report filed, assessee disallowed Rs. 18797100/- as per 21 (e) (page no 40 of the paper Book) on account of provision of Gratuity. v. Subsequently, to process the ROI, CPC sent an email communication to the assessee on 6/12/2019, but assessee did not respond to the same. ( Page no 7 of 24 of the intimation at page 164 of the paper book). vi. Therefore the CPC made following adjustment:- Sr No. Particulars Amount of ITR Amount Annexure of 3 CD variance 1 Inconsistency in provision for payment of gratuity Nil 1879711 18797100 2 Inconsistency in amount disallowed u/s 43B in any preceding previous 7936802 7460238 478584 Page | 20 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. year but allowable during the previous year 3 Inconsistency in amount disallowable u/s 40 (a) (ia) on account of non compliance with the provision of s chapter XVII B 0 23400 23400 4 Any sum received from employees as contribution to any provident fund or superannuation fund or any fund set up under ESI act or any other fund from the welfare of employees to the extent not credited to the employees account on or before the due date [36(1)(va)] 0 28574826 28574826 Page | 21 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. vii. CPC did not make any other adjustment to the total income of the assessee. Total deduction of chapter VI A claimed of Rs 57882440/- was allowed as it is. Thus total income as per ROI was Rs 6980460/- CPC determined at Rs 54852350/- . However, TDS of Rs 49766269/- was claimed and CPC granted credit of Rs 48835776/- viii. Against the intimation LD CIT (A) noted in Para no 5.1 that assessee claims to have filed an application u/s 154 of the Act on 13/10/2020. Status of the same is not filed before us. However, on earlier occasion Id AR stated that these appeals cannot be decided as appeal against the order u/s 154 is pending before ld CIT (A). Thus it is apparent that all the issues which are part of 143 (1) order but are not part of the order 143 (3) cannot be decided in this appeal. ix. Subsequently return of income filed by the assessee was picked up for scrutiny on six different issues stating CASS selection reasons and issues stating reason code, issue, underlying Information and rationale (page no 65 of the paper book) as under :- 1) claim of large value of refund as the assessee has claimed substantial amount of refund, 2) Large squared up loans during the year, as per tax audit report, substantial amount of loan have been squared up by the assessee during the year. 3) Lower amount disallowed under section 40 A (7) in ITR (part A – OI) in comparison to Page | 22 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. audit report the tax audit has reported amount disallowable under section 40 A (7) on account of provision for payment of gratuity as per tax audit report and part of such amount has not been fully reported in part A- OI of ITR 4) mismatch in expenditure of personal nature reported in audit report and ITR: there is difference between the total expenditure of personal nature as per ITR (schedule OI) and total expenditure of personal nature is per Form 3CD 5) deduction from total income (chapter VI – A) (business ITR) :- the assessee has claimed substantial deduction under chapter VI – A (excluding deduction claimed under section 80 IA/80 IAB/80 IAC/80 IB 80 I BA/80 IC/80 IE/80 IB vii. Consequently, assessment order under section 143 (3) read with section 143 (3A) and 143 (3B) of the income tax act was passed on 24/3/2021 at the total income of ₹ 6,980,460/- viii. The learned AO has categorically mentioned that no modification to the income determined under section 143 (1) has been made. ix. Now it is important to see that what amount the return of income is filed by the assessee. The assessee filed its return of income on 31/10/2018 at a total income of ₹ 6,980,460. The intimation under section 143 (1) of the act was passed on Page | 23 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. 6/2/2020 at ₹ 121,133,751. However, the assessment order under section 143 (3) on 24/3/2021 is passed at the returned income of ₹ 6,980,460/-. Thus, the returned income is the assessed income as per the impugned assessment order. 24. Thus, we are surprised that, in absence of any addition to the income of the assessee by the learned assessing officer , wherein he has categorically accepted the returned income of the assessee as the assessed income, what is the grievance of the assessee to file an appeal before the learned CIT – A. However we appreciate that, before us the assessee has taken a ground of deduction under section 80 JJA of the act, which was not before the learned CIT – A. 25. However we are not concerned, about the purpose of filing of the appeal by the assessee before the learned CIT – A, we are concerned with the appeal filed before us. 26. At the outset, it is clear that assessee has filed an additional ground of appeal as per letter dated 22 March 2023 wherein the validity of intimation under section 143 (1) of the act has been challenged. This ground of appeal has not been pressed for admission; therefore, it is dismissed as not admitted. 27. The additional ground raised by the assessee on 9 June 2023 with respect to the claim of the assessee under section 80 JJA of the act where the assessee claimed deduction in the original return of income filed at ₹ 57,632,440/- whereas the assessee claims that it is eligible for the total deduction of ₹ 91,021,434/-. Without going into the merits of the claim of the assessee that though in form number 10 DA filed by the assessee notified for the relevant assessment year there was no field for stating the amount of deduction allowable in respect of deduction claimed in earlier to Page | 24 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. preceding years, assessee did not mention that, we are of the view that if the claim of the assessee is in accordance with the law, raised within the permissible time limit, supported by the necessary evidence, same should be granted to the assessee. Further, for admission of this ground of appeal, no further facts are required to be investigated, therefore, we admit the additional ground raised by the assessee for enhanced to deduction under section 80 JJA of the act. 28. As on consequence of admission of this additional ground, the only aspect is to examine the computation of deduction claimed by the assessee under section 80JJA of the act, i.e. whether it is ₹ 57,632,440 or ₹ 91,021,434 allowable to the assessee, we remit this issue back to the file of the learned assessing officer with a direction to the assessee to substantiate its claim of ₹ 91,021,434/-. The learned assessing officer, on examination of the claim, if found in accordance with the law, after giving an opportunity of hearing to the assessee, is a directed to allow it. Accordingly, additional ground filed by the assessee on 9 June 2023 is allowed. 29. Now we come to the grounds of appeal mentioned in the memorandum of appeal. Ground number 1 is against the decision of the learned CIT – A wherein he upheld the additions made by the assessing officer by not adjudicating in on the grounds of appeal raised by the appellant on merits. On careful consideration we find that the learned CIT – A has categorically stated that since no new adjustment or addition was made wherein in the order under section 143 (3) of the act, as the intimation under section 143 (1) of the act is separately appealable, holding that the issues which were the subject of prime of AC adjustment under section 143 (1) cannot be Page | 25 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. challenged by appellant through the present appeal against the order under section 143 (3) of the act and therefore he did not admit/adjudicate ground number 1 – 4 of the appeal before him. Partly be aggrieved with the order of the learned CIT – A those issues which are part of the intimation under section 143 (1) of the act but are not part of the assessment order under section 143 (3) of the act, such grounds are required to be agitated by the assessee only by filing an appeal against such intimation before the learned CIT – A. It is not the prerogative of the assessee to contest any ground in any proceedings. However we are of the view that in fact the disallowance of provision of payment of gratuity of ₹ 18,797,100/– is part of the assessment proceedings under section 143 (3) and also part of the intimation under section 143 (1) of the act and therefore at least this ground is also forming subject matter of appeal, therefore, that ground should have been adjudicated by the learned CIT – A. Accordingly ground number one of the appeal of the assessee is partly allowed. 30. Coming to the ground number 2 of the appeal, where assessee has agitated that the learned CIT – A order in upholding the disallowance of ₹ 18,797,100/– being the provisions for gratuity under section 40 (A) (7) stating that it amounts to double addition as assessee has already disallowed the same in the computation of total income. On careful analysis of the argument of the learned authorized representative, we find that in the tax audit report the above disallowance has been reported by the assessee at serial number 21 (e) where the provision for gratuity not allowable under section 40 A (7) is reported at ₹ 18,779,100/-. The learned CPC has categorically stated that though the amount is held to be Page | 26 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. disallowable as reported in the tax audit report but it is not disallowed in the return of income. The reason for selection of scrutiny of the return of income placed at page number 65 of the paper book clearly refers that this is the reason for selection. Before us, the learned authorized representative has categorically stated that this amount has already been this disallowed in the computation of total income. The computation of total income is placed before us at page number 2 of the paper book. According to that, total sum of ₹ 20,065,655/- because of gratuity is added back to the total income and a sum of ₹ 1,268,555/- is considered as allowable. Therefore, naturally, the difference between the above two sums have been offered by the assessee as taxable income. i.e. Rs. 1,87,97,100/–. Thus, it apparent that in the total income filed by the assessee are some of ₹ 6,980,462/– the assessee has already disallowed the above sum. We are also conscious of the fact that the assessment order is also assessed the income of the assessee only at ₹ 6,980,462/– Therefore, the necessary implication is that the learned AO has not made this addition doubly but has accepted the disallowance made by assessee in its return of income. It is an altogether a different aspect that the addition has been made in the intimation passed under section 143 (1) of the act, against which the separate proceedings are initiated and are pending before different authority. However, we are of the view that if the above amount i.e. ₹ 18,797,100/– is once again added to the total income of the assessee determined at ₹ 6,980,462/-, it will amount to the double addition. We are also conscious about the fact that the CPC issued notice to the assessee before making the proposed adjustment under section 143 (1) (a) by an email communication which was not responded to Page | 27 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. by the assessee. Had it been responded at that time, perhaps the addition would not have been made in the intimation itself. As before us the application under section 154 of the act five before the learned assessing officer was also not filed, we are not aware that how this has been dealt with by the learned assessing officer. The learned authorized representative has categorically stated that the appeal is pending before the learned CIT-A, therefore, it would be appropriately dealt with by him looking at our observation. Therefore, now, we set-aside this ground of appeal back to the file of the learned assessing officer and direct the learned assessing officer to examine the same and deleted the addition. Ground number 2 of the appeal of the assessee is allowed with above direction. 31. Ground number 3 of the above appeal is against the disallowance of ₹ 28,574,826/– being the payment of employee's contribution to employee welfare fund is made beyond the due date prescribed under the relevant statutes. It is not disputed before us that the above issue is part of the assessment proceedings under section 143 (3) of the act. This is not the reason for which there is return of income of the assessee is selected. The learned assessing officer has assessed the total income of the assessee at the returned income under section 143 (3) of the act. Therefore, this issue does not arise from the assessment order at all. The addition has been made under section 143 (1) of the act. The addition has been made only because of the reason that assessee failed to give any reply to the communication made by the central processing Centre before making adjustment. under section 143 (1) (a) of the act. The learned CIT – A as held that this issue is not part of the assessment order which is challenged Page | 28 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. before him but part of the intimation under section 143 (1) of the act and therefore he did not adjudicated and dismissed this ground. However, this issue has been raised before us. The assessee has filed additional evidences in the form of some writ petition filed before the honourable Delhi High Court, which has not been decided at all. In that petition, the association, of which assessee is one of the members has raised certain practical difficulties regarding deposit of provident fund sums. However, the honourable Delhi High Court was pleased to pass an interim order on 9/1/2020 wherein it was accepted as a concession the provident fund dues which are to be deposited by the members of the petitioner even without the AADHAR cards, can submit the deposit by way of demand draft in the name of the concerned RPFC along with an application and closing the list of employees whose AADHAR Cards are either not available or suffer from any mismatch. During the course of hearing, we asked the learned authorized representative to submit whether any such compliance has been made or not, he was further asked to show about the mismatch of AADHAR Card of the employees. The learned authorized representative submitted that the numbers can be verified by assessing officer. Therefore, we direct the assessee to produce such details before the learned assessing officer of the direction given at paragraph number two of the order. As the assessee has those details pertaining to assessment year 2018 – 19 where Adhar cards are not available of the employees, we direct the assessee to 1 st submit the necessary evidence with respect to the membership of the assessee with Indian staffing Federation for the relevant assessment year and then submit the necessary evidence of non-availability of the same within 90 days from the Page | 29 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. date of this order. The assessee is also directed to submit the necessary details accepted by the provident fund authorities in terms of the order of the honourable Delhi High Court before the assessing officer. The learned assessing officer may examine the same, if the same is accepted by the respective provident fund authorities, may decide the issue on the merits, on submission of such details within 90 days of this order by the assessee, within further period of 30 days computed the disallowance, if any. 32. With respect to the same ground of appeal the learned authorized representative has stated that that the due date as prescribed under section 38 of the provident fund act should be considered from the date of payment of the wages and not from the end of the month in which the wages are due. Thus, the argument is that the time limit of 15 days for section 38 of the provident fund act for computing the due date of deposit of the provident fund dues shall be considered from the date of payment of the wages. For this proposition, he relied upon the decision of the coordinate benches as stated above. We also asked the learned authorized representative to point out if there is any contrary decision on the issue, he simply submitted that he relies on this tribunal decisions. On careful consideration and because of the judicial precedents of the higher forum available against the assessee, We do not agree with the above argument and reject it at threshold for reason that this issue has already been decided by the honourable Gujarat High Court against the assessee in Checkmate facilities V. Deputy commissioner [2018 SCC ONLINE GUJ 1719] and in ASK ME LAB CON SERVICES LTD. V. INCOME TAX OFFICER [2019 SCC ONLINE GUJ 1094] where following two questions were admitted. Page | 30 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. 1. Whether the expression "within fifteen days of the close of every month" in Section 6(3) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 must be interpreted as having reference to the close of the month, for which, the wages are required to be paid with corresponding duty to deduct employee's contribution and to deposit the same in the fund? 2. Whether the liability to deposit the employee's contribution to the fund gets differed by another month, if such wages are paid in the following month? The honourable High Court held as under:- "2. Mr. Sudhir M. Mehta, the learned counsel appearing for the assessee very fairly pointed out that both the proposed questions are settled and answered by a coordinate bench of this court in the case of CHECKMATE FACILITY AND ELECTRONIC SOLUTIONS PVT. LTD. v. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 1 in Tax Appeal No. 1256 of 2018 decided on 15/10/2018. 3. We may quote the relevant observations made by the coordinate bench in CHECKMATE FACILITY (supra) as under: "2. The issue arises in following background. The assessee is a private limited company. For the assessment year 2013-14,the assessee had filed the return of income declaring total income of Rs. 65,65,980/. The return was taken in scrutiny by the Assessing Officer. In the order of assessment passed by him under section 143(3) of the Income Tax Act, 1961 ("the Act' for short)a disallowance of employees' contributions towards provident fund and ESI amounting to Rs. 1,16,87,091/was made. This was on account of the fact that the assessee though had deducted such contributions, failed to deposit the same with the statutory authorities within the due date. The Assessing Officer referred to all such deductions and late depositing the contributions in the order of assessment. All these deposits would indicate that the assessee had made the deposits late beyond 20th of Month following the month for which such deduction was being made. The date of 20th of each month was chosen by the Assessing Officer was made Page | 31 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. considering the normal period of 15 days for making deposit and a further grace period of five days specified under the statute. Since the assessee was delayed in making the deposits even beyond such extended period, he applied the disallowance in terms of section 36(1)(va) of the Act. 3. Learned counsel for the appellant would not dispute that the issue of disallowance of late deposited employees' contributions of PF and ESIC stands covered by the Division Bench judgment of this Court in case of Commissioner of Income Tax v. Gujarat State Road Transport Corporation reported in [2014] 366 ITR 170 (Guj). He however raised a slightly different contention which did not arise for consideration before this Court in case of Gujarat State Road Transport Corporation (supra). He submitted that in terms of section 38 of the Employees Provident Funds and Miscellaneous Provisions Act, 1952, reference to the time limit for depositing the contributions within 15 days of close of the month must be to the month in which the salary payment is made. For example, therefore if the salary payment for the month of June is made on 5th July,the employer would have time upto 15th of August for depositing the employee's contribution of provident fund. Looking from this angle, there was no delay or default on the part of present assessee. 4. In terms of section 36(1)(va) of the Act, any sum received by the assessee from any of his employees to which the provisions of section 2(24)(x) applies, would be deducted as long as such sum is credited by the assessee to the employee's account in the relevant funds on or before due date. Explanation to the said subsection provides that for the purpose of the said clause, "due date" means a date by which the assessee is required as an employer to credit an employee's contribution to the account in which relevant fund under any Act, rule, order or notification issued thereunder or under any standing order, award, contract of service or otherwise. section 38 of the Employees Provident Funds and Miscellaneous Provisions Act, 1952, becomes relevant. Subsection (1) thereof reads as under: "(1) The employer shall, before paying the member his wages in respect of any period or part of period for which contributions are payable, deduct the employee's contribution from his wages which together with his own contribution as Page | 32 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. well as an administrative charge of such percentage [of the pay (basic wages, dearness allowance, retaining allowance, if any, and cash value of food concessions admissible thereon) for the time being payable to the employees other than an excluded employee, as the Central Government may fix. He shall within fifteen days of the close of every month pay the same to the fund "electronic through internet banking of the State Bank of India or any other Nationalized Bank authorized for collection" on account of contributions and administrative charge]: "Provided that the Central Provident Fund Commissioner may for reasons to be recorded in writing, allow any employer or class of employer to deposit the contributions by any other mode other than internet banking". 5. This provision thus requires an employer before paying the employee his wages to deduct the employee's contribution along with the employer's own contribution as fixed by the Government. It is further required that he shall within fifteen days of the close of every month pay the same to the fund such contribution and administrative charges. In terms of this provision thus, after deducting the employee's contribution towards the funds, the same has to be deposited with the Government within fifteen days of the close of every month. Reference to fifteen days of the close of the month must be in relation to the month during which the payment of wages is to be made and corresponding liability to deduct employee's contribution to the fund arises. The expression "within fifteen days of the close of every month" therefore must be interpreted as having reference to the close of the month, for which, the wages are required to be paid with corresponding duty to deduct employee's contribution and to deposit the same in the fund. 6. Learned counsel for the appellant is therefore not correct in contending that if such wages are paid in the following month, the liability to deposit the employee's contribution to the fund gets differed by another month." 4. Thus the two issues raised in this Tax Appeal stands squarely covered by the aforesaid decision of the coordinate bench. 5. In the result, this appeal fails and is hereby dismissed." Page | 33 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. 33. Further honourable madras High Court in case of CIT versus madras radiators and pressings Ltd 2003] 129 Taxman 709 (Madras)/[2003] 264 ITR 620 (Madras) where the following question was raised:- 34. "1. Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that there was certain amount of ambiguity over the expression „15 days from the close of the month' as defined in section 38 of the Employees' Provident Fund Scheme, 1952, vis-a-vis month in which salary becomes due to the employees and the salary is paid to the employee? 35. The honourable madras High Court answered it is under:- "4. In our considered opinion, we are of the view that the Tribunal is not correct in coming to the conclusion that there was some ambiguity in construing the expression "month" used in para 38 of the Scheme under the Provident Fund Act on the premise that the assessee used to pay the salary to its employees only on the 7th day of succeeding month under section 5 of the Payment of Wages Act. It is true that section 5 of the Payment of Wages Act provided for payment of wages in respect of certain categories of industries on or before the 7th day of succeeding month. However, section 4 of the Act provided for fixation of wage period and also provided that no wage period shall extend one month. 5. Para 29 of the Scheme under the Provident Fund Act provided that the contribution payable should be calculated on the basis of the basic wages and other allowances actually drawn during the whole month whether paid on Page | 34 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. daily, weekly, fortnightly or monthly basis. The expression "basic wages" is defined as all emoluments, which are earned by an employee while on duty or on leave or on holidays with wages in either case in accordance with the terms of the contract of employment and which are paid or payable in cash to him. 6. Para 30 of the Scheme of the Provident Fund Act imposed an obligation on the employer to remit both the shares of contributions in the first instance and para 32 empowered the employer to recover the employees' contributions from the wages of the employees. As per para 38 of the Scheme, the employer is required to remit both the contributions together with the administrative charges thereon within 15 days before the close of every month. 7. Thus as seen from the above provisions, it is clear that it is the responsibility of the employer to make payment of the contributions at the first instance irrespective of the fact, whether the wages are paid in time or not. Hence, the actual payment of wages on the 7th day of succeeding month would not any way alter the situation and give room for interpreting that the "close of 15th day" has to be calculated from the end of the month in which the wages were actually paid. The payment of wages on the 7th day of succeeding month would not in any way alter the initial responsibility of the employer for making payment of contributions, which he is statutorily authorized to recover from the employee's salary, whether the salary is paid in time or not. Hence the one and only reasonable conclusion is that the Page | 35 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. employer has to remit both the contributions to the Provident Fund within 15 days from the close of the month for which the employees earned their salary i.e. Salary payable. Our view has been fortified by the Division Bench of this Court in Presidency Kid Leather (P.) Ltd. v. Regional Provident Fund Commissioner [1997] 91 F.J.R. 661, wherein the Division Bench of this Court held as follows: "As per para 38 of the Employees' Provident Funds scheme, the employer is required to remit both the employees as well as the employer's share of contributions together with administrative charges thereon before the close of the 15th of every month. Para of the Scheme imposes an obligation on the employer to remit both the shares of contributions in the first instance and para 32 of the Scheme enables the employer to recover the employees' contributions from the wages of the employees. The initial responsibility for making payment of the contributions lies on the employer irrespective of the fact whether the wages are paid in time or not. As such, the Provident Fund payments made after the due date will attract the penal damages under section 14B of the Act." The Tribunal committed serious error in coming to the contrary conclusion. Hence the first two questions of law referred to us are answered in the negative against the assessee and in favour of the Revenue." Page | 36 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. 36. In view of the decision of the honourable Gujarat High Court and Honourable Madras High court, tribunal decisions cited by the learned authorized representative in case of master polishers and Kanoi paper and industries private limited (supra) are not the correct position. Therefore, we have no hesitation in dismissing this argument. Accordingly, ground number 3 of the appeal is partly allowed with above direction. 37. Coming to ground number 4 of the appeal, we find that the assessee has claimed that and unabsorbed depreciation of ₹ 2,282,480/– brought forward from earlier years has not been allowed as a set of by the learned assessing officer. We find that brought forward unabsorbed depreciation of earlier year becomes the current depreciation. The facts are also not available on record. However looking at the submission made by the assessee before the learned CIT – A2 specifically stated that while filing the return of income the appellant has not claimed the correct unabsorbed depreciation which has resulted into short set-off of ₹ 2,282,480/–. During the course of assessment proceedings as per letter dated 1/12/2020 the assessee has resubmitted the correct statement of brought forward losses and unabsorbed depreciation. In view of this, we find that the learned assessing officer should have looked into this aspect. Accordingly, we direct the assessee to submit the correct detail of unabsorbed depreciation brought forward for the impugned assessment year, the learned AO may examine the same and Grant assessee the set-off of same. Ground number 4 is allowed. 38. Ground number 5 is with respect to grant of TDS credit short by ₹ 930,493 with respect to the certain companies amalgamated with the assessee with effect from 1/4/2017. We find that if the income of Page | 37 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. such assessee's are incorporated in the income of the assessee for the impugned assessment year, according to the provisions of section 199 of the income tax act, the assessee is entitled to get credit for the same. The learned assessing officer may also examine that whether the assessee has furnished requisite information to the deductor with respect to correcting the permanent account number in form number 26AS by incorporating the permanent account number of the assessee against the permanent account number of vital link consultancy private limited and Steeplap technologies private limited. The learned assessing officer, if found appropriate. if necessary amendment is not made in accordance with rule 37 (2BA) by deductor despite intimation and request by the assessee to the deductor, May independently enquiry and grant credit to the assessee of the tax deduction at source. Accordingly, ground number 5 of the appeal is allowed with above direction. 39. In the result ITA number 3227//M/2022 filed by the assessee for assessment year 2018-19 is partly allowed. ITA No. 257/Mum/2023 A.Y. 2019-20 40. Now we come to the appeal of the assessee for assessment year 2009 – 10. Assessee filed its return of income on 23/6/2020 at rupees Nil. The intimation under section 143 (1) of the act was passed on 30/3/2021 determining total income of the assessee at ₹ 66,086,240 /–. The adjustment was with made with respect to the provision for payment of gratuity under section 40 A (7) disallowed by the assessee in the return of income of ₹ 2,072,737/– which is computed by the central processing Centre at ₹ 18,604,674/– resulting into an addition of ₹ 16,531,937/-, further the Page | 38 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. disallowance/addition of ₹ 49,554,302/- was made with respect to the employees contribution stated in the audit report not deposited within the due date prescribed under the respective provident fund act. Assessee has claimed the tax deduction at source credit of ₹ 6,97,52,309/- which was determined by the learned CIT (A) at ₹ 69,502,936/- 41. The assessee aggrieved with the intimation under section 143 (1) of the act referred in appeal before the learned Commissioner of income tax i.e. national faceless appeal Centre, Delhi (the learned CIT – A) raising four ground of appeal. The learned CIT – A with respect to the provision of graduate the under section 40A (7) disallowed of ₹ 16,531,937 held that in the clause number 21 (e) of tax audit report the disallowance and stated to be ₹ 18,604,674 whereas in the return of income they assessee has disallowed only ₹ 2,072,737 and therefore the learned CPC on the basis of the information contained in the return of income and the tax audit report disallowed the above sum. Assessee contended before him that actual provision of the gratuity is ₹ 6,464,733 only and after that actual payment is of ₹ 2,257,275/– and the actual disallowance should have been considered as ₹ 4,208,458 only. Assessee inadvertently claimed a lesser sum of ₹ 2,072,737 as disallowance in the return of income filed. Assessee claimed that that the sum reported in the tax audit report of ₹ 18,604,604/- is based on actuarial valuation and was only for the purposes of the requirement of accounting standard and does not represent the actual provision. The learned CIT – A rejected the argument stating that neither the assessee has filed a revised return correcting the above error, even the revised the tax audit report was also not filed the argument of Page | 39 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. actuarial valuation only for accounting purposes is also not correct. rejected the claim. With respect to the disallowance of the employees contribution deposited belatedly of the provident fund et cetera amounting to ₹ 33,782,889, the assessee submitted that though disallowances indicated in the tax audit report but assessee did not disallow the same in the return of income filed. The only contention was that the same is deposited before the due date of filing of return of income. The assessee also challenged the applicability of due date of the provident fund act stating that it applies from the date of payment of wages. The learned CIT – A rejected all the arguments of the assessee by giving a detailed reasoning and also relying upon the decision of the honourable Gujarat High Court which have also been referred by us when deciding the appeal of the assessee for assessment year 2018-19 by this order assessee also submitted that the credit for tax deduction assures of the companies amalgamated with the assessee company should be granted, the learned CIT – A specifically referred to the provisions of section 199 of the act and rule 37 BA (2) of the income tax rules and directed the assessee to get it rectified by the deductor. The learned CIT – A passed appellate order on 1/12/2022 that is in challenge before us. 42. Assessee raised the following grounds of appeal ITA No. 257/Mum/2023 A.Y. 2019-20 1. The Ld. Commissioner of Income-tax (Appeals) erred in upholding the disallowance of Rs. 1,65,31,937/-, being provision for Gratuity under Section 40A (7) of the Act. without appreciating the fact that: Page | 40 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. a) An amount of Rs 64.65.733- has been debited to the Statement of Profit and Loss and after considering the gratuity paid amounting to Rs. 22,57,275/-, the disallowance ought to be restricted to Rs. 42,08,458/- b) Out of the correct amount of disallowance of Rs. 42,08,458/-, an amount of Rs. 20,72,737/- has been added back to taxable income in the return of income and therefore the disallowance ought to have been restricted to Rs. 21,35,721/- 2. The Ld. Commissioner of Income-tax (Appeals) erred in upholding the disallowance of Employee's Contribution to PF Rs. 3,37,82,889/- and Employee's contribution to ESIC of Rs. 1,57,71,413/- aggregating to Rs. 4,95,54,302/- without appreciating the fact that the delay in payment of employee's contribution to Welfare Funds were due to circumstances beyond the control of the appellant. 3. The Ld. Commissioner of Income tax (Appeals) erred in not directing the Assessing Officer to grant credit of TDS of Rs. 2,49,373/- of two companies that had amalgamated with the appellant w.e.f. 01.04.2017 without appreciating the fact that the corresponding income was offered to tax by the appellant. 43. Assessee also raised an identical ground of appeal with respect to the claim of deduction under section 80 JJA of the income tax act stating that the return of income assessee has claimed deduction of ₹ 63,149,610/– however, the assessee is correctly of deduction is ₹ 154,171,044. This ground is identical to additional ground of appeal raised by the assessee for assessment year 2018-19. However there is a basic difference in that appeal is it was against the assessment Page | 41 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. order passed under section 143 (3) of the act where the subject matter of the deduction under chapter VIA was the issue. Here the issue is when the intimation has been passed based on the return of income filed by the assessee under section 143 (1) of the act whether the assessee can raise a fresh claim or the enhanced deduction before the tribunal or not. For assessment year 2018-19. we have already admitted the additional ground. Therefore, for this year also we admit the additional ground raised by the assessee. However as both the parties have agreed that this ground may be decided independently by the learned assessing officer, we set-aside back to the file of the learned assessing officer with a direction to the assessee to substantiate the claim before the learned assessing officer with respect to the quantum as well as with respect to the additional claim made before the tribunal. The learned assessing officer may decide the issue that an appeal against the intimation under section 143 (1) of the act, the assessee can revise the claim made in the original return of income, without revising the original return and what should be the quantum of such deduction. Accordingly, we set-aside the additional ground raised by the assessee the file of the learned assessing officer. Accordingly, additional ground raised by the assessee is allowed with above direction. 44. The relevant ground for deduction of gratuity as well as the provident fund and for tax deduction at source credit are identical to the ground of appeal decided by us in the appeal of the assessee for assessment year 2018-19. With similar direction as given in appeal of the assessee for assessment year 2018 – 19, we restore all these ground back to the file of the learned assessing officer to decide in Page | 42 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. accordance with the above direction and direct the assessee to substantiate its claim. The learned assessing officer with respect to the gratuity may also call for a revised tax audit report as well as also verify the actuarial valuation of the gratuity. In fact, before us it was not argued that actuarial valuation made by the assessee of the gratuity provision is only for accounting and not for the purposes of the tax computation. According to us, such an argument is not sustainable. Accordingly, ground numbers 1 – 3 of the appeal in the memorandum of appeal filed by the assessee are partly allowed. 45. In the result, appeal of the assessee for assessment year 2019 – 20 is partly allowed. ITA No. 256/Mum/2023 A.Y. 2020-21 46. For Ay 20-21 Assessee has raised following grounds of appeal:- 1. The Id. Commissioner of Income-tax (Appeals) erred in upholding the disallowance of Employee's contribution to Provident Fund of ₹ 2,41,27,112/- and Employee's contribution to ESIC of ₹ 16,18,600/-, aggregating to ₹ 5,57,45,712/- without appreciating the fact that the delay in payment of employee's contribution to Welfare Funds were due to circumstances beyond the control of the appellant. 47. As in the appeal of the assessee for assessment year 2020 – 21, the only issue is with respect to the disallowance of employees contribution which was deposited by the assessee beyond the due date prescribed in the respective provident fund act, for this year also the assessee has made a request for admission of the additional evidence is made for assessment year 2018 – 19. Page | 43 ITA No.3227/MUM/2022, 257,256/MUM/2023 A.Y.2018-19, 19-20 & 20-21 CALIBEHR BUSINESS SUPPORT SERVICES PVT. LTD. 48. As this issue is already been decided by us in the appeal of the assessee for assessment year 2018 – 19 and 2020 – 21, we have given certain directions and findings, based on that, assessee is directed to submit the details before the learned assessing officer and the learned assessing officer may decide the issue in accordance with the law. 49. Accordingly, appeal of the assessee for assessment year 2020 – 21 is allowed with above direction. 50. In the result appeal of the assessee for all these three years are partly allowed for statistical purposes Order pronounced in the open court on 26.06.2023. Sd/- Sd/- (VI KAS AWASTHY) (PRAS HANT MAHAR ISHI) (JUDIC IAL MEM BER) (ACC OUNTANT MEMB ER) Mumbai, Dated: 26.06.2023 Dragon Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai
Other Referred Cases
Collector Land Acquisition v. MST Katiji & Ors., Checkmate Facilities v. Deputy Commissioner, ASK Me Lab Con Services Ltd. v. Income Tax Officer, CIT v. Madras Radiators and Pressings Ltd.
Laws Referred To
Income Tax Act, 1961
1:1 Consultation on Salary Structuring
₹1
Guide to Charitable Trusts: Formation, Benefits, and Compliance
₹0
1:1 Consultation on Business Valuations
₹1
Sales Forecasting Sheet
₹100
Memorandum Amendment Resolution
₹0
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