Sahajanand Technologies pvt. Ltd., , Surat V. DCIT, Circle2(1)(20, Surat, Surat

ITA 81/SRT/2022

AI Insights

Sahajanand Technologies Pvt. Ltd. appealed against the order of the National Faceless Appeal Centre/Commissioner of Income Tax (Appeals), which confirmed the disallowance of Rs. 5,45,595 for late payment of employees' contributions to ESI and PF for the Assessment Year 2017-18. The Assessing Officer had initially made this disallowance following the Gujarat High Court's decision in CIT Vs Gujarat State Road Transport Corporation. The Tribunal considered submissions from both parties and referenced recent Supreme Court jurisprudence, which clarified that timely deposit of such contributions is a prerequisite for claiming deductions under Section 36(1)(va) of the Income Tax Act.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 302191 (ITAT-SURAT)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 05-12-2022
• Assessment Year: misc
• Appeal Filed On: 10-06-2022
• Other Referred Cases: Checkmate Services Private Limited Vs CIT, Ajashy Engineering Sales Pvt. Ltd. Vs ITO, CIT Vs Gujarat State Road Transport Corporation (GSRTC)
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 43B; 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA No. 81/Srt/2022 (Assessment Year: 2017-18) (Virtual hearing) Sahajanand Technologies Pvt. Ltd., Building A1, Sahajanand Estate, Vakharia Wadi, Near Dabholi Char Rasta, Surat. PAN No. AADCS 4343 N Vs. D.C.I.T., Circle 2(1)(2), Surat. Appellant/ assessee Respondent/ revenue Assessee represented by Shri Rajesh C Shah, CA Department represented by Shri Vinod Kumar, Sr. DR Date of hearing 06/12/2022 Date of pronouncement 06/12/2022 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of National Faceless Appeal Centre, Delhi (NFAC)/learned Commissioner of Income Tax (Appeals), (in short, the ld. CIT(A)) dated 14/03/2022 for the Assessment year (AY) 2017-18 wherein the assessee has raised following grounds of appeal: “1. The Hon'ble CIT(Appeals) has erred in passing order u/s 250 of the Act. 2. The Hon'ble CIT(Appeals) was not justified in confirming in addition of Rs. 5,45,595/- made u/s 36(1)(va) of the Act on account of late payment of PF and ESI. 3. The appellant reserves the right to add, alter, amend or withdraw any grounds of appeal.” ITA No. 816/Srt/2022 Sahjanand Technologies Pvt. Ltd. Vs DCIT 2 2. Brief facts of the case are that the Assessing Officer while passing the scrutiny assessment for the A.Y. 2017-18 made disallowance of Rs. 5,45,595/- under Section 36(1)(va) of the Income Tax Act, 1961 (in short, the Act) on account of delay in deposit of employees’ contribution of ESI and PF. The Assessing Officer disallowed the same by following the decision of Hon'ble Gujarat High Court in CIT Vs Gujarat State Road Transport Corporation (GSRTC) [2014] 366 ITR 170 (Gujarat). On appeal before the ld. CIT(A), the disallowance was confirmed. Further aggrieved, the assessee has filed the present appeal before this Tribunal. 3. We have heard the submissions of parties and have gone through the orders of the lower authorities carefully. At the outset of hearing, the learned Commissioner of Income Tax-Departmental Representative (ld. CIT-DR) for the revenue submits that the grounds of appeal raised by the assessee is covered against the assessee by the latest decision of Hon’ble Apex Court in the case of Checkmate Services Private Limited Vs CIT in Civil Appeal No. 2833 of 2016 dated 12/10/2022 wherein the Hon’ble Apex Court held that it is an essential condition for claiming such deduction that employee’s contribution of ESI and PF are deposited on or before due date. It was further held that non-obstante clause under Section 43B or in any content in that provision would not absolve the assessee from its liability to deposit the employee’s contribution on or before due date for filing return as a condition for deduction. ITA No. 816/Srt/2022 Sahjanand Technologies Pvt. Ltd. Vs DCIT 3 4. On the other hand, the learned Authorised Representative (ld. AR) of the assessee submits that the he is relying upon the latest decision of Delhi Tribunal in Ajashy Engineering Sales Pvt. Ltd. Vs ITO in ITA No. 1515/Del/2021 dated 26/09/2022. 5. We have considered the submissions of both the parties and have gone through the orders of lower authorities. We have also gone through the case laws relied upon by both the parties. We find that the lower authorities disallowed the deduction of employees’ contribution of ESI and PF and other funds by taking a view that such contribution was paid beyond due date prescribed under the said Act. We find that the Hon'ble Apex Court in the case of Checkmate Services Private Limited Vs CIT (supra) in a recent decision by considering divergent views of various High Courts held that it is an essential condition for deduction of such amount are that employees’ contribution are deposited on or before due date under the statutory provisions under such Acts. It was further held that non-obstante clause would not in any manner dilute or override the employees’ obligation to deposit the amount retained by it or deducted by it from employee’s income, unless the condition i.e. deposited on or before due date, is correct and justified. The non-obstante clause has to be understood in the context of entire provisions of Section 43B which is to ensure timely payment before the returns are filed of certain liabilities ITA No. 816/Srt/2022 Sahjanand Technologies Pvt. Ltd. Vs DCIT 4 which are to be borne by assessee in the form of tax, interest payment and other liabilities. 6. So far as reliance by ld. AR of the assessee in case of Ajashy Engineering Sales Pvt. Ltd. Vs ITO (supra), is concerned, this decisions was rendered prior to pronouncement of judgement of Hon'ble Apex Court in the case of Checkmate Services Private Limited Vs CIT (supra), so it is not helpful to the assessee. The decision of Hon'ble Apex Court is a binding precedent by virtue of Article 141 of the Constitution of India. 7. In the result, this appeal of assessee is dismissed. Order pronounced in the open court on 6 th December, 2022. Sd/- Sd/- (Dr. ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat, Dated: 06/12/2022 *Ranjan Copy to: 1. Assessee – 2. Revenue - 3. CIT(A) 4. CIT 5. DR 6. Guard File By order Sr. Private Secretary, ITAT, Surat