Dedha India Solutions P.Ltd, New Delhi V. ITO, Ward 7(1), New Delhi

ITA 268/DEL/2023

AI Insights

The case involves Dedha India Solutions P. Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals) - National Faceless Appeal Centre, Delhi, concerning an intimation order passed by the Assessing Officer under Section 154 of the Income Tax Act, 1961. The dispute centered on the disallowance of expenditure towards employees' contributions to ESIC/PF under Section 36(1)(va) of the Act for the Assessment Year 2019-20. The Assessing Officer had initially made adjustments due to delays in the deposit of PF/ESIC contributions, which were upheld by the CIT(A) in light of a Supreme Court judgment. The Tribunal, referencing a similar case, remitted the matter back to the Assessing Officer for a fresh examination.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121532 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-07-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 02-02-2023
• Other Referred Cases: Check Mate Pvt. Ltd. vs. CIT, Sentinel Consultants P. Ltd. vs. ACIT-CPC, Weather Comfort Engineers Private Limited vs. ACIT-CPC, Pr. CIT vs. Khyati Realtors (P) Ltd., Kanai Paper and Industries Ltd. vs. ACIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B” DELHI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A. No.268/DEL/2023 Assessment Year 2019-20 Dedha India Solutions P. Ltd., 410, Prakash Deep Building, 7, Tolstoy Marg, Connaught Place Central Delhi New Delhi. Vs. ITO, Ward-7(1) New Delhi TAN/PAN: AADCD0044K (Appellant) (Respondent) Appellant by: Shri Baldev Raj, CA Shri Manish Upneja, CA Respondent by: Shri Vivek Kumar Upadhyay, Sr.DR Date of hearing: 25 07 2023 Date of pronouncement: 08 08 2023 O R D E R PER PRADIP KUMAR KEDIA, A.M.: T he capt ione d a ppeal has bee n file d by t he assess ee a gainst the order of the ld. C ommissi on er of Inco me T ax (A ppea ls)- N ati ona l Fac ele ss A ppeal Centre (N FA C), D elhi ( ‘CIT(A )’ in shor t) dat ed 19. 12 . 2022 aris ing fr om t he inti mat i on orde r da te d 28. 09.2020 passed b y t he Assess ing Office r (A O ) under Se ct ion 154 of the I nc ome T ax Act, 196 1 (t he A ct) co nce rning A Y 2019- 20. 2. T he ca ptioned appeal relat es t o Assess ment Y ear s 2019- 20 invol vi ng issue of dis allow a nce of ex penditu re t ow ards emplo ye es cont ri but io n to ESIC/PF unde r Secti on 36( 1)( va) of the A ct. I.T.A. No.268/Del/2023 2 3. Br ie fl y stated, the assessee is eng aged in the bus iness of ma n pow er s uppl y and has f ile d the ret ur n o f income decla ring tota l inc ome a t Rs . 35,44, 240/ -. T he A ssessing O ffice r passed a n order unde r Section 143(1) as ses sin g t he total i ncome at Rs. 2, 38, 77, 496/- b y ma ki ng a dj ust ment on a cc ount o f de la y i n depos it o f PF/E S IC in rela t ion to e mplo yee ’s cont ribut i on. 4. A disall ow ance of Rs. 2, 03,33, 252/ - w as carri ed out on account of l at e deposit of e mplo ye es cont ri bution to PF/E SIC. The assessee filed rect ificat io n ap plic ati on w hich w as rej e cte d b y the A ssessi ng O ffi cer vi de orde r dated 28.09. 2020. 5. T he a ssesse e prefe rred appeal be fore the C IT (A ) agains t the pro pos ed a djus tment. T he C IT (A ) a lso denied the r elief in the ligh t of judgment of H on ’ble Supr eme C ourt in the ca se of C heck Mat e P vt. Ltd. vs. CIT (2022) 143 taxm ann. com 178 (SC ). 6. A ggrieve d b y t he fi rs t appellate order, the ass essee is i n appea l before t he T ri buna l. 7. T he l d. couns el fo r t he ass essee at t he outset submitted t hat the de posi t of e mp lo yees contr ibu ti on sh oul d be reckon ed from the mon th in w hi ch the sal ar y has bee n actuall y dis bu rsed ra ther t han the mo nth for w hich the sal ar y relates . For ins ta nce, t he sala r y fo r the mo nth o f A pril , 2018 has b een paid i n t he mont h of May 20 18 and therefore, due da te for de posi t of emplo ye es c ont ri but ion to PF/E SIC should be reckoned from May 20 18 an d conse quent l y the due date s hould be reco rde d as 15. 06. 2018. O nce, this me thodolog y is a dopte d then t he re i s no del ay i n deposi t of the empl oye es contr ib ut io n tow ards E SIC as w ell as PF. A tabulat ion sta tement to j us tif y a pr oposi t io n w as re fe rre d whic h is I.T.A. No.268/Del/2023 3 re produc ed h ereunder: ( A ) M o n t h w i s e d e t a i l o f p a y m e n t o f s a l a r y , d u e d a t e o f d e p o s i t a n d d a t e o f d e p o s i t o f E S I E S I C C o n t r i b u t i o n Nu m b e r 1 1 0 0 0 5 5 3 4 9 0 0 0 1 0 0 1 S a l a r y M o n t h M o n t h i n w h i c h s a l a r y b e c o m e d u e a n d p a i d E m p l o y e e s c o n t r i b u t i o n r e c e i v e d D u e D a t e A c t u a l D a t e o f P a y m e n t E m p l o y e e s C o n t r i b u t i o n D e p o s i t e d A p r - 1 8 M a y - 1 8 2 , 1 8 , 8 3 6 1 5 / 0 6 / 1 8 2 9 / 0 5 / 1 8 2 , 1 8 , 8 3 6 M a y - 1 8 J u n - 1 8 2 , 1 5 , 4 8 4 1 5 / 0 7 / 1 8 2 9 / 0 6 / 1 8 2 , 1 5 , 4 8 4 J u n - 1 8 J u l - 1 8 2 , 3 4 , 2 3 1 1 5 / 0 8 / 1 8 2 9 / 0 7 / 1 8 2 , 3 4 , 2 3 1 J u l - 1 8 A u g - 1 8 2 , 3 8 , 8 1 2 1 5 / 0 9 / 1 8 2 8 / 0 8 / 1 8 2 , 3 8 , 8 1 2 A u g-1 8 S e p-1 8 2 , 5 2 , 7 2 4 1 5 / 1 0 / 1 8 3 0 / 0 9 / 1 8 2 , 5 2 , 7 2 4 S e p - 1 8 O c t - 1 8 2 , 4 6 , 5 8 0 1 5 / 1 1 / 1 8 3 0 / 1 0 / 1 8 2 , 4 6 , 5 8 0 O c t - 1 8 N o v - 1 8 2 , 4 9 , 9 4 0 1 5 / 1 2 / 1 8 2 9 / 1 1 / 1 8 2 , 4 9 , 9 4 0 N o v - 1 8 D e c - 1 8 2 , 5 1 , 6 4 8 1 5 / 0 1 / 1 9 2 8 / 1 2 / 1 8 2 , 5 1 , 6 4 8 D e c - 1 8 J a n - 1 9 2 , 7 2 , 1 3 9 1 5 / 0 2 / 1 9 3 0 / 0 1 / 1 9 2 , 7 2 , 1 3 9 J a n - 1 9 F e b - 1 9 2 , 8 2 , 4 0 5 1 5 / 0 3 / 1 9 2 8 / 0 2 / 1 9 2 , 8 2 , 4 0 5 F e b - 1 9 M a r - 1 9 2 , 8 1 , 4 0 4 1 5 / 0 4 / 1 9 2 0 / 0 3 / 1 9 2 , 8 1 , 4 0 4 M a r - 1 9 A p r - 1 9 2 , 7 8 , 4 6 6 1 5 / 0 5 / 1 9 1 8 / 0 4 / 1 9 2 , 7 8 , 4 6 6 T o t a l 3 0 , 2 2 , 6 6 9 3 0 , 2 2 , 6 6 9 ( B ) M o n t h w i s e d e t a i l o f p a y m e n t o f s a l a r y , d u e d a t e o f d e p o s i t a n d d a t e o f d e p o s i t o f P F E S I C C o n t r i b u t i o n Nu m b e r 1 1 0 0 0 5 5 3 4 9 0 0 0 1 0 0 1 S a l a r y M o n t h M o n t h i n w h i c h s a l a r y b e c o m e d u e a n d p a i d E m p l o y e e s c o n t r i b u t i o n r e c e i v e d D u e D a t e A c t u a l D a t e o f P a y m e n t E m p l o y e e s C o n t r i b u t i o n D e p o s i t e d A p r - 1 8 M a y - 1 8 1 3 , 0 5 , 2 8 2 1 5 / 0 6 / 1 8 2 9 / 0 5 / 1 8 2 , 1 8 , 8 3 6 M a y - 1 8 J u n - 1 8 1 2 , 6 8 , 6 0 2 1 5 / 0 7 / 1 8 2 9 / 0 6 / 1 8 2 , 1 5 , 4 8 4 J u n - 1 8 J u l - 1 8 1 3 , 6 5 , 4 7 1 1 5 / 0 8 / 1 8 2 9 / 0 7 / 1 8 2 , 3 4 , 2 3 1 J u l - 1 8 A u g - 1 8 1 3 , 8 9 , 0 9 5 1 5 / 0 9 / 1 8 2 8 / 0 8 / 1 8 2 , 3 8 , 8 1 2 A u g - 1 8 S e p - 1 8 1 3 , 7 9 , 2 8 9 1 5 / 1 0 / 1 8 3 0 / 0 9 / 1 8 2 , 5 2 , 7 2 4 S e p-1 8 O c t-1 8 1 3 , 8 6 , 2 4 6 1 5 / 1 1 / 1 8 3 0 / 1 0 / 1 8 2 , 4 6 , 5 8 0 O c t - 1 8 N o v - 1 8 1 3 , 9 2 , 7 0 1 1 5 / 1 2 / 1 8 2 9 / 1 1 / 1 8 2 , 4 9 , 9 4 0 N o v - 1 8 D e c - 1 8 1 4 , 2 9 , 6 5 7 1 5 / 0 1 / 1 9 2 8 / 1 2 / 1 8 2 , 5 1 , 6 4 8 D e c - 1 8 J a n - 1 9 1 4 , 7 6 , 9 1 3 1 5 / 0 2 / 1 9 3 0 / 0 1 / 1 9 2 , 7 2 , 1 3 9 J a n - 1 9 F e b - 1 9 1 5 , 3 7 , 3 4 4 1 5 / 0 3 / 1 9 2 8 / 0 2 / 1 9 2 , 8 2 , 4 0 5 F e b-1 9 M a r-1 9 1 5 , 0 0 , 6 0 3 1 5 / 0 4 / 1 9 2 0 / 0 3 / 1 9 2 , 8 1 , 4 0 4 M a r - 1 9 A p r - 1 9 1 4 , 9 6 , 8 9 7 1 5 / 0 5 / 1 9 1 8 / 0 4 / 1 9 2 , 7 8 , 4 6 6 T o t a l 1 , 6 9 , 2 8 , 1 0 0 3 0 , 2 2 , 6 6 9 ( c ) T o t a l l i n g e r r o r w h i l e c o m p i l e d t h e a m o u n t i n F or m N o . 3 C D 3 , 8 2 , 4 8 3 G r a n d To t a l 2 , 0 3 , 3 3 , 2 5 2 I.T.A. No.268/Del/2023 4 8. T he l d. coun sel t hus s ubmit ted t hat i n the li gh t of the decisi on of the Co-or di na te B enc h in t he case of Senti nel Consu lt ants P . Ltd . in ITA s N o. 7 & 8/D el/ 202 3 A ssess m ent Ye ar 2018-19 a nd 2019 -20 order da te d 12. 06. 2023, t he matter sh ould be r emitted to t he fi le of t he A ssess ing Of fice r for sat is fyi ng i tsel f about de pos it of empl oye es contr ibu ti on w el l w it hi n t i me and f or rect ifica t io n of the i nt imat i on d raw n unde r Secti on 143(1) of the A ct. 9. Iden ti cal iss ue c rop ped up in the case of the Se nt inel Consu lt ants P . Lt d. (su pra). T he r ele vant obs er va ti on o f t he C o- ord inate Be nc h in the mat ter is re pro duced hereun der : 9 . W e h a v e c a r e f u l l y c o n s i d e r e d t h e r i v a l s u b m i s s i on s a n d p e r u s e d t h e m a t e r i a l a v a i l a b l e o n r e c o r d . T h e d i s a ll o w a n c e o f e m p l o y e e s ’ c o n t r i b u t i o n t o P F / E S I C f o r b r e a c h o f c on d i t i o n u n d e r S e c t i o n 3 6 ( 1 ) ( v a ) i s i n c o n t r o v e r s y . 9 . 1 W e n o t i c e a t t h e o u t s e t t h a t a n o p p o r t u n i t y w a s g i v e n v i a e l e c t r o n i c p l a t f o r m o f t h e d e p t t . f o r t h e p r o p o s e d a d j u s t m e n t s a n d i n t h e a b s e n c e o f e - r e s p o n s e , t h e a d j u s t m e n t s w e r e c a rr i e d o u t t h e C P C - B e n g l u r u a n d i n t i m a t i o n w a s i s s u e d e n h a n c i n g t h e a ss e s s e d i n c o m e i n t h e c a p t i o n e d a s s e s s m e n t y e a r s . T h e C I T ( A ) i n t he f i r s t a p p e a l h a s s u s t a i n e d t h e a d j u s t m e n t s t o w a r d s b e l a t e d d e p o s i t s o f e m p l o y e e s ’ c o n t r i b u t i o n t o P F / E S I C i n t h e l i g h t o f t h e j u d g m e nt r e n d e r e d b y t h e H o n ’ b l e S u p r e m e C o u r t i n C h e c k m a t e P v t . L t d . v s . C IT , ( 2 0 2 2 ) 1 4 3 t a x m a n n . c o m 1 7 8 ( S C ) . T h e c o n t e n t i o n o f t h e A s s e s s ee t h a t s u c h a d d i t i o n s c a n n o t b e m a d e u n d e r t h e u m b r e l l a o f S . 14 3 ( 1 ) i s c o v e r e d a g a i n s t t h e a s s e s s e e t h e d e c i s i o n o f t h e c o - o r d i n a te b e n c h i n t h e c a s e o f Weather Comfort Engineers Private Limited vs. ACIT-CPC ITA No. 959/Del/2021 order dated 15/02/2023. T h e a c t i o n o f C P C a n d C I T ( A ) t h u s c a n n o t b e f a u l t e d w h e r e s o m e o p p o r t u n i t y w a s a d m i t te d l y g i v e n f o r e - r e s p o n s e . 9 . 2 W e n o w t u r n t o a l t e r n a t e p l e a o n b e h a l f o f t h e a s s e s s e e f o r g r a n t o f d e d u c t i o n u n d e r g e n e r a l p r o v i s i o n s f o r d e du c t i o n o f e x p e n d i t u r e u n d e r S . 3 7 o f t h e A c t . W e d o n o t s e e an y m e r i t i n s u c h p l e a t h a t t h e b e l a t e d d e p o s i t o f e m p l o y e e s c o n t r i b ut i o n s t o P F / E S I C g o v e r n e d u n d e r S e c t i o n 3 6 ( 1 ) ( v a ) i s a l s o s i m u l t a n e ou s l y a m e n a b l e t o d e d u c t i o n u n d e r S e c t i o n 3 7 ( 1 ) o f t h e A c t . I n t e r m s o f t h e p r o v i s i o n , S e c t i o n 3 7 ( 1 ) p e r m i t s d e d u c t i o n o f e x p e n d i t u r e w h i ch i s n o t i n t h e n a t u r e o f e x p e n d i t u r e p r e s c r i b e d i n S e c t i o n s 3 0 t o 3 6 o f t h e A c t a n d a l s o n o t b e i n g i n t h e n a t u r e o f c a p i t a l e x p e n d i t u r e o r p e r s o n a l I.T.A. No.268/Del/2023 5 e x p e n s e s o f t h e a s s e s s e e . T h u s , i n v i e w o f s u c h m a nd a t e o f l a w , t h e d e d u c t i o n o f e x p e n d i t u r e u n d e r t h e g e n e r a l c l a u s e of S e c t i o n 3 7 ( 1 ) w o u l d n o t e x t e n d t o e x p e n d i t u r e s p e c i a l l y c o v e r e d wi t h i n t h e a m b i t o f S e c t i o n 3 6 ( 1 ) ( v a ) o f t h e A c t . T h e H o n ’ b l e S u p r e m e Co u r t i n t h e c a s e o f C h e c k m a t e P v t . L t d . ( s u p r a ) i t s e l f e x p l a i n s t h i s p o s i t i o n i n P a r a 3 2 o f t h e J u d g m e n t . S u c h v i e w a l s o d r a w s s u p p o r t f ro m t h e o b s e r v a t i o n s m a d e i n r e c e n t j u d g m e n t o f t h e H o n ’ b l e S u p r e m e C o u r t i n t h e c a s e o f P r . C I T v s . K h y a t i R e a l t o r s ( P ) L t d . ( 2 0 2 2 ) 1 4 1 t a x m a n n . c o m 4 6 1 ( S C ) . T h e a l t e r n a t e p l e a i s t h u s w it h o u t a n y m e r i t . 9 . 3 W e a l s o t a k e n o t e o f y e t a n o t h e r p l e a m a d e o u t o n b e h a l f t h e a s s e s s e e t o w a r d s m e t h o d o l o g y o f c a l c u l a t i o n o f d e f au l t u n d e r t h e r e l e v a n t P F / E S I C A c t . T h e L d . C o u n s e l c o n t e n d s t h a t t h e m o n t h d u r i n g w h i c h t h e d i s b u r s e m e n t o f s a l a r y i s a c t u a l l y m a d e w o u l d b e r e l e v a n t f o r t h e p u r p o s e s o f d e t e r m i n a t i o n o f d u e da t e o f d e p o s i t u n d e r t h e r e s p e c t i v e s t a t u t e . T h e a c c r u a l o f l i a b i li t y t o w a r d s p a y m e n t o f s a l a r y w i t h o u t a c t u a l d i s b u r s e m e n t w o u l d n o t f a s t e n o b l i g a t i o n f o r d e p o s i t s o f e m p l o y e e s c o n t r i b u t i o n in t h e l a b o u r A c t s p e r s e . a s o b s e r v e d b y t h e c o - o r d i n a t e b e n c h i n K a no i P a p e r a n d I n d u s t r i e s L t d . v s . A C I T ( 2 0 0 2 ) 7 5 T T J 4 4 8 ( C a l ) . Th i s a s p e c t h a s n o t b e e n f o u n d t o b e e x a m i n e d b y t h e A s s e s s i n g O f f i c e r o r C I T ( A ) . H e n c e w i t h o u t e x p r e s s i n g a n y o p i n i o n o n m e r i t s o n t h i s a sp e c t , w e d e e m i t e x p e d i e n t t o r e s t o r e t h e m a t t e r t o t h e f i l e o f d e s ig n a t e d A O . I t s h a l l b e o p e n t o t h e a s s e s s e e t o p l a c e f a c t u a l m a t r i x b e fo r e t h e A O a n d t a k e s u c h p l e a f o r e v a l u a t i o n o f t h e A O . T h e A O s h al l e x a m i n e t h i s a s p e c t a n d f r e s h o r d e r i n a c c o r d a n c e w i t h l a w a f t e r g i v i n g p r o p e r o p p o r t u n i t y . 1 0 . A s r e g a r d s t h e j u s t i f i c a t i o n s a d v a n c e d o n b e h al f o f t h e a s s e s s e e t o w a r d s i m p r o p e r d i s a l l o w a n c e s u n d e r S . 4 3 B a n d 4 0 (a ) ( i a ) i n r e s p e c t o f s e r v i c e t a x l i a b i l i t y a n d n o n - d e d u c t i o n o f T D S o n i n t e r e s t e t c . w e a r e n o t i n a p o s i t i o n t o e x p r e s s a n y v i e w in t h e a b s e n c e o f r e q u i s i t e d o c u m e n t a r y e v i d e n c e s . T h e s e i s s u e s a r e al s o r e s t o r e d t o t h e f i l e o f A O . T h e a s s e s s e e s h a l l b e a t l i b e r t y t o a d d u c e a l l l e g a l a n d f a c t u a l a r g u m e n t s b e f o r e t h e A s s e s s i n g O f f i c e r f o r l o g i c a l c o n c l u s i o n i n t h e m a t t e r . T h e A O s h a l l d e t e r m i n e t he i s s u e s i n v o l v e d i n a c c o r d a n c e w i t h l a w a f t e r g i v i n g p r o p e r o p p o r t u ni t y . 1 1 . H e n c e , i n t e r m s o f s u c h o b s e r v a t i o n s , t h e i n t i ma t i o n s f o r b o t h A s s e s s m e n t Y e a r s 2 0 1 8 - 1 9 a n d 2 0 1 9 - 2 0 a r e s e t a s i d e a n d t h e i s s u e s i n a p p e a l a r e r e s t o r e d b a c k t o t h e f i l e o f t h e A s s es s i n g O f f i c e r f o r i t s f r e s h d e t e r m i n a t i o n i n a c c o r d a n c e w i t h l a w . 1 2 . I n t h e r e s u l t , b o t h t h e c a p t i o n e d a p p e a l s o f t he a s s e s s e e a r e a l l o w e d f o r s t a t i s t i c a l p u r p o s e s . 10. T he obs ervati ons made in the dec is ion of t he C o-o rdina te Bench shal l app ly mutatis m uta ndis. In pari t y w ith the aforesaid decisi on, th e mat te r i s remi tt ed to t he fi le of t he A sse ssing O fficer I.T.A. No.268/Del/2023 6 for fres h adjudicat ion of t he iss ue in acc ordance wit h law havi ng re ga rd to t he obse rvations made in t he cas e of Se nti nel Consu lt ants P . Lt d. (supr a ). Needl ess to s ay, pr ope r op portunit y sha ll be given t o t he a ssesse e to adduce eviden ce tow ards t imel y depos it o f empl oye es cont ri but ion to t he PF/ ESIC . 11. In the r esu lt, the appeal of t he a ssessee is all ow ed f or sta tis ti ca l purpos es . Order dictated and pronounced in the open Court on 08/08/2023 Sd/- Sd/- [CHANDRA MOHAN GARG] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /07/2023 Prabhat