Adani Infrastructure and Developers Pvt. Ltd, Ahmedabad V. The DCIT CPC, Banglore

ITA 430/AHD/2020

AI Insights

The case involves Adani Infrastructure and Developers Pvt. Ltd. appealing against the order of the CIT(A)-1, Ahmedabad, which confirmed the disallowance of Rs. 6,08,711/- being the employees' contribution to Provident Fund. The disallowance was initially made by the Assessing Officer during the electronic processing of the return of income under section 143(1)(a) of the Income Tax Act, 1961, on the grounds that the payment was made after the due date prescribed under the relevant Act. The tribunal's decision was influenced by the Supreme Court's ruling in Checkmate Services Pvt. Ltd., which clarified that for assessment years prior to AY 2021-22, the non obstante clause under section 43B does not apply to amounts held in trust, such as employees' contributions deducted from their income.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131393 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 12-06-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 10-08-2020
• Other Referred Cases: Checkmate Services Pvt. Ltd. vs. CIT, Harrisons Malayalam Ltd. vs. CIT, Ms. Nalina Dyave Gowda vs. CIT, Cemetile Industries vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 43B; 250; 139(1)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH Before: Ms. Annapurna Gupta, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member Adani Infrastructu re and Developers Pvt. Ltd. Adani Ho use, Near Mith akhali Six Roads, Navrangp ura, Ah medabad -3 80009 PAN: AAFCA952 1J (Appellant) Vs DCIT, CPC, Ban galore (Resp ondent) Asses see b y : Shri Dhrun al Bha tt, A.R. Revenue by : Shri Bhola ram Dev ashi, Sr. D. R. Date of hearing : 13-06 -2 023 Date of pronouncement : 16-06 -2 023 आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This is an appeal filed by the assessee against the order of the ld. CIT(A)-1, Ahmedabad, in proceeding u/s. 250 of the Act vide order dated 27/07/2020 passed for the assessment year 2018-19. ITA No. 430/Ahd/2020 Assessment Year 2018-19 I.T.A No. 430/Ahd/2020 A.Y. 2018-19 Page No. Adani Infrastructure and Developers Pvt. Ltd. vs. DCIT 2 2. The assessee has taken the following grounds of appeal:- “1. On the facts and in the circumstances of the case, the learned CIT(A) erred in confirming disallowance of Rs. 6,08,711/- being Employees' contribution to Provident Fund made by the AO, CPC on the ground that the aforesaid payment was made after the due date prescribed under relevant Act, even though the payment was made within the time prescribed under section 139(1) of the IT. Act, 1961 for filing the return of income. 2. In law and in the facts and circumstances of the case, the learned CIT(A) erred in confirming disallowance made by the Assessing Officer as such adjustment is beyond the scope of section 143(1) of the I.T. Act, 1961. 3. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal.” 3. At the time of hearing before us, the counsel for the assessee fairly conceded that the issue is now covered against the assessee by the decision of Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. 143 taxman.com 178 (SC) and therefore the issue may be decided accordingly in the light of the observations made in the aforesaid decision. 4. We observe that the position on this issue has now been unambiguously clarified by the Hon'ble Supreme Court with respect to all assessment years prior to AY 2021-22 in the case of Checkmate I.T.A No. 430/Ahd/2020 A.Y. 2018-19 Page No. Adani Infrastructure and Developers Pvt. Ltd. vs. DCIT 3 Services (P.) Ltd. [2022] 143 taxmann.com 178 (SC) wherein the Supreme Court held that for assessment years prior to AY 2021-22, non obstante clause under section 43B could not apply in case of amounts which were held in trust as was case of employee's contribution which were deducted from their income and was held in trust by assessee- employer as per section 2(24)(x), thus, said clause would not absolve assessee-employer from its liability to deposit employee's contribution on or before due date as a condition for deduction. The Supreme Court observed that there is a marked difference between nature and character of assessee-employer's contribution and amounts retained by assessee from out of employee's income by way of deduction wherein one is liability to be paid by employer and second is deemed income as per section 2(24)(x) which is held in trust by assessee-employer, thus, said marked difference was to be borne while interpreting obligation of assessee-employer under section 43B of the Act. The Hon'ble Supreme held that the non obstante clause under section 43B could not apply in case of amounts which were held in trust as was case of employee's contribution which were deducted from their income and was not part of assessee-employer's income, thus, said clause would not absolve assessee-employer from its liability to deposit employee's contribution on or before due date as a condition for deduction. Again the Supreme Court in the case of Harrisons Malayalam Ltd. [2022] 145 taxmann.com 608 (SC), dismissed the SLP of the Department against order of High Court that where assessee-company failed to pay I.T.A No. 430/Ahd/2020 A.Y. 2018-19 Page No. Adani Infrastructure and Developers Pvt. Ltd. vs. DCIT 4 employees’ contribution towards EPF and ESI within due date prescribed in respective Acts, deduction under section 36(1)(va) was not allowable. Recently in the case of Ms. Nalina Dyave Gowda [2023] 146 taxmann.com 420 (Bangalore - Trib.) the assessee during, financial year 2018-19 (assessment year 2019-20) made payment of employees' contribution to ESI and PF beyond due date specified under relevant Act and claimed deduction of same under section 36(1)(va). The Assessing Officer made disallowance of employees' contribution to ESI and PF while electronically processing return of income under section 143(1)(a) of the Act. The ITAT held that disallowance under section 143(1)(a) was valid in view of Supreme Court's decision in case of Checkmate Services (P.) Ltd. v. CIT [2022] 143 taxmann.com 178 and the assessee will not be entitled to deduction of belated payment of ESI and PF of employees' share of contribution as per provisions of section 36(1)(va) of the Act. Again, recently Pune ITAT in the case of Cemetile Industries v. ITO [2022] 145 taxmann.com 209 (Pune - Trib.) held that where assessee-employer deposited amount of employees contribution towards employees' provident fund and employees' state insurance corporation beyond due date stipulated in respective Acts, disallowance made under section 36(1)(va) was justified. The ITAT further held that adjustment under section 143(1)(a) by means of disallowance made for late deposit of employees' share to relevant funds beyond date prescribed under respective Acts was proper. I.T.A No. 430/Ahd/2020 A.Y. 2018-19 Page No. Adani Infrastructure and Developers Pvt. Ltd. vs. DCIT 5 4.1 In view of the above observations respectfully following the decision of the Honourable Supreme Court in the case of Checkmate Services Private Ltd supra and Harrisons Malayalam Ltd supra and in the light of our observations, we hereby dismiss the assessee’s appeal. 5. In the result, the appeal of the assessee is dismissed. Order pronounced in the open court on 16-06-2023 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 16/06/2023 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/ आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद