JALARAM TRANSPORT, BILASPUR,BILASPUR V. .ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1(1), BILASPUR, BILASPUR

ITA 433/RPR/2024

AI Insights

The case involves Jalaram Transport, a partnership firm, which appealed against the orders of the Assistant Commissioner of Income Tax and the Commissioner of Income Tax (Appeals) regarding the denial of exemption for share of profit received from partnership firms and the addition of employees' provident fund contributions to income. The Tribunal examined whether the share of profit from partnership firms should be exempt under section 10(2A) of the Income Tax Act, 1961, and whether the disallowance of provident fund contributions was justified. The Tribunal found that the share of profit was indeed exempt and should not have been added to the taxable income of Jalaram Transport, while the issue of provident fund contributions was governed by the timing of payments relative to statutory due dates.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 106803 (ITAT-RAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2019-2020
• Other Referred Cases: Checkmate Services Pvt. Ltd. Vs. CIT, Parva Buildcon vs DCIT, Kunjbihari Agrawal vs DCIT, M/s BPS Infrastructure Vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Assessee Lawyers: G.S. AGRAWAL
• Keywords: Set aside; Business income; Rectification of order; Earning of tax free income; Deemed to accrue or arise in india
• Section: 250; 154; 143(1); 54; 22; 13; 43B; 20

Judgement Text

"आयकर अपीलीय अिधकरण, रायपुर Ɋायपीठ, रायपुर IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR ŵी रिवश सूद, Ɋाियक सद˟ एवं ŵी अŜण खोड़िपया, लेखा सद˟ क े समƗ । BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM आयकर अपील सं. / ITA No: 433/RPR/2024 (िनधा[रण वष[ Assessment Year: 2019-20) Jalaram Transport, Near CMD College, Link Road, Bilaspur, C.G.-495001 V s Assistant Commissioner of Income Tax, Circle-1(1), Bilaspur PAN: AAFFJ6542H (अपीलाथŎ/Appellant) . . (ŮȑथŎ / Respondent) िनधाŊįरती की ओर से /Assessee by : Shri G. S. Agrawal, CA राजˢ की ओर से /Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई की तारीख / Date of Hearing : 16.12.2024 घोषणा की तारीख/Date of Pronouncement : 23.12.2024 आदेश / O R D E R Per Arun Khodpia, AM: The captioned appeal of the assessee is directed against the order of Commissioner of Income Tax (Appeal), NFAC [in short “Ld. CIT(A)”] u/s 250 of the Income Tax Act, 1961 (in short “the Act”), for the Assessment Year 2019-20, dated 20.08.2024, which in turn arises from the order u/s 154 dated 20.10.2022 passed by the Asst. Commissioner of Income Tax, Circle 1(1), Bilaspur (for short, “The Ld. AO”), wherein application of assessee u/s 154, qua the additions made through the intimation u/s 143(1) issued by Central Processing Centre(CPC), dated 06.05.2020, sought to be deleted on account of apparent mistake by the assessee, have been rejected. 2 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur 2. The grounds of appeal raised by the assessee reads as under: 1. That under the facts and the law, the Ld. Commissioner of Income Tax (Appeals), NFAC Delhi erred in confirming the Order of Ld. AO who rejected application filed u/s 154 who erred in not allowing the ground that share profit received from 5 Partnership Firms amounting to Rs. 74,38,844/- was exempt u/s 10(2A) of the Income Tax Act, 1961 and were appearing in the Profit and Loss Account of Head Office and in Schedule 12 of audited Final Accounts and was disclosed in the ITR in \"Annexure Business & Profession\". Prayed that Rs.74,38,844/- is disclosed in accounts and was claimed in ITR as exempt u/s 10(2A) the mistake as apparent from O record, the addition of above sum be deleted. 2. That under the facts and the law, the Ld. Commissioner of Income Tax (Appeals), NFAC Delhi further erred in confirming the Order of Ld. AO who rejected application filed u/s 1 54 who erred in not allowing the ground that Rs.74,38,844/- being share profit received by Appellant from 5 Partnership Firms were exempt u/s 10(2A), and on similar set of facts he allowed the same in Appeal for Assessment years 2018-19. Prayed that it is mistake apparent from record and 'to delete the addition of Rs.74,38,844/-. 3. That under the facts and the law, the Ld. Commissioner of Income Tax (Appeals), NFAC Delhi erred in confirming the Order of Ld. AO who rejected application filed u/s 154 who erred in confirming the addition made u/s 143(1) of Rs. 30,28,287/- for contribution received from employees towards Provident Fund which was paid by the Appellant within the due date for filing of the Return. Prayed that the sum of Rs. 30,28,387/- is not deemed income and be deducted from the income of the Appellant. 4. That under the facts and the law, the Ld. Commissioner of Income Tax (Appeals), NFAC Delhi erred in confirming the Order of Ld. AO who rejected application filed u/s 154 who erred in confirming the addition of Rs.30,28,387/-, amount received as contribution towards Provident Fund from the employees and paid by the Appellant, rejecting the submission that adjustment u/s 143(1) (a) is without jurisdiction and that it was highly debatable issue, and therefore, the addition is uncalled-for. 5. That under the facts and the law, the Ld. Commissioner of Income Tax (Appeals), NFAC Delhi further erred in rejecting the explanation that reliance on Checkmate decision of the Honorable Supreme Court is not applicable in the present case as in that case the amendment was made by the Finance Act, 2021 which is applicable from Assessment Year 2021-22, and therefore, the above judgement of Honorable Supreme Court is not applicable in the present case. The addition of Rs.30,28,387/- kindly be deleted. 3 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur 3. Briefly stated, the assessee is a partnership firm engaged in the business of transportation, had kept and maintains regular books of accounts which are audited. Appellant had its head office at Bilaspur with branches at Raigarh, CG and Talcher, Orrisa. The books of account are maintained separately for head office as well as the branch offices. During the year under consideration, the assessee had earned income from various partnership firm in which the assessee is a partner. The share of profit earned from such firms, were as under: 1) Share profit from Firm SMASL UH JRT (JV) Rs. 1,186 2) Share profit from VFPL ASIPLLLL JRT (JV) Rs. 30,26,904 3) Share profit from Firm NKBPL (JV) Rs. 18,20,120 4) Share profit from Firm JRT UH (JV) Rs. 25,64,304 5) Share profit from Firm JRT VA (JV) Rs. 26,330 Total Rs. 74,38,844 3.1 Since aforesaid amount was received from its partnership firm, the assessee had claimed the aforesaid amount to be exempt u/s 10(2A), which is duly reflected in the return of the assessee. Later on, the ITR of the assessee was processed u/s 143(1), wherein exemption claimed by the assessee u/s 10(2A) was denied by the Central Processing Centre (CPC), Bengaluru on 06.05.2020. Further, another disallowance on account of delayed payment of employee’s contribution to provident fund was made for Rs. 30,28,287/-. Accordingly, the retuned income of the assessee for 4 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur Rs.84,97,808/- was enhanced to Rs.1,89,64,940/-, after making an addition of Rs.73,38,884/- on account of rejection of claim for exemption u/s 10(2A) of Act and disallowance of employee’s contribution because of delayed payment beyond the specified date under the relevant statute to the extent of Rs. 30,28,287/-. 4. Aggrieved with the aforesaid addition, assessee made an application before the Ld. AO seeking rectification of mistakes apparent from record u/s 154 of the Act, however, the contentions of assessee are rejected by the Ld. AO and an order u/s 154 was passed on 20.10.2022, for the sake of clarity, copy of order u/s 154 is extracted as under: 5 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur 6 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur 5. Being dissatisfied with the decision of Ld. AO in rejecting the application of the assessee u/s 154, an appeal is preferred before the First Appellate Authority i.e., Ld. CIT(A), however, the contention and arguments raised by the assessee could not find favor before the Ld. CIT(A), therefore, appeal of the assessee is dismissed on both the grounds with the following observations: 5.1 Observations on Ground no. 1 before Ld. CIT(A): Regarding rejection of claim of assessee u/s 10(2A), pertaining to share of profit received from various partnership firms: 6. I have carefully considered the grounds of appeal, statement of facts, written and oral arguments of the appellant. I have also perused the income tax return available on the ITBA. From perusal of intimation order u/s 143(1) of the Income-Tax Act, 1961 dated 06.05.2020, it is gathered that income from business or profession was considered at Rs. 1,89,64,940/-instead of Rs. 84,97,808/- making an addition of Rs. 1,04,67,130/-. The above addition to returned income included share income from various partnership firms amounting to Rs. 74,38,844/- and delayed payment of employee contribution to provident fund amounting to Rs. 30,28,287/-. The first adjustment was made under 143(1 (incorrect claim) while the second adjustment was made invoking sub clauses 143(1)(a)(i), (ii) and (iv) i.e. in view of arithmetical error, incorrect claim as well as disallowance of expenditure indicated in audit report but not taken into account in computing the total income in the return. 7 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur 7. Ground No. 1: This ground is regarding denial of claim of exemption u/s 10 (2A) of Rs. 74,38,844/-. On perusal of Income Tax Return of the appellant, it is seen that following incomes are credited to P & L account: 1. GP 9,16,40,402/- 2. Interest 1,09,55,169/- No amount under the head \"'any other income\" in Sr. No. 2(xi) of P & L account are filled. Thus, share profit is not credited to P&L account. 7.1 On perusal of schedule BP-Computation of Income from business or profession of return of income, it is seen that amount of Rs.74,38,844/- being income credited to P&L and included in profit before tax which is exempt exempt have been reduced from 'Profit before tax as per profit and loss account (l,56,19,680/-), to arrive at adjusted profit of Rs. 81,80,836/- and finally after further adjustments, to arrive at income of Rs. 84,97,808/-. 7.2 The appellant has claimed in the submission that the amount Rs. 74,38,844/represents share of profit from five partnership firm and that the same is exempt under 10(2A). However, although the appellant has reduced this amount from profit before tax while arriving at business income, no such amount has been credited to P&L account as explained in para 7 above. Only credits to P&L account are gross profit transferred from trading account and interest. There is no indication in the return of income gross profit or interest includes any exempt income. Further, there is no entry in exempt income schedule of the return of income. Thus, the claim of the exemption of share of profit of Rs. 74,38,844/- is not clearly coming out from P & L account and computation. In fact, it appears that the said amount was never credited to P&L account before it was debited at the stage of computing income from business. Therefore, the CPC has correctly made the addition and there was 8 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur no mistake apparent from record in intimation u/s 143(1) that the jurisdictional AO could have rectified. Thus, the AO has correctly rejected application u/s 154 on this point. The ground no. 1 is dismissed. 5.2 Observations on Ground no. 2 before the Ld. CIT(A): Regarding disallowance of Employees contribution to provident fund: 9 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur 10 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur 11 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur 12 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur 13 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur 14 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur 15 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur 16 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur 17 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur 6. Aggrieved with the aforesaid decision by Ld. CIT(A), the assessee carried the matter before this tribunal, which is under consideration before us. 7. Ground 1 & 2 before us: Regarding rejection of claim of assessee qua exempt income u/s 10(2A), being share of profit received from the partnership firm. 7.1 At the outset, Ld. AR on behalf of the assessee submitted the assessee is a partnership firm, who is also a partner in certain other firms namely, SMASL UH JRT (JV), VFPL ASIPL JRT (JV), NK PL (JV), JRT UH (JV) and JRT VA (JV) and had received share of profit from the aforesaid partnership firms to the tune of Rs. 74,34,844/-, during the relevant assessment year. To substantiate the aforesaid fact, Ld. AR drew our attention to page no. 26 of the Assessee’s Paper Book (APB), comprising of Computation of Total Income of the assessee, wherein the profit of the assessee is picked up from profit & loss accounts, copy of P&L account has been placed at page no. 69 of the APB showing a net profit of Rs.1,56,19,680/-. Ld. AR further drew our attention to page no. 76 of APB, wherein the amounts of share of profit received by the 18 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur assessee from various partnership firm are included to the income of the assessee under schedule 12 to P & L Account, titled as “Other Receipts”. Ld. AR, further submitted that under similar facts and circumstances, share in profit of the same firms claimed to be exempt u/s 10(2A) by the assessee is allowed by the Ld. CIT(A)NFSC, Delhi, vide order u/s 250 of the Act for the preceding AY 2018-19 dated 20.08.2024, wherein the relevant observations of Ld. CIT(A) are culled out as under: 19 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur 7.2 Based on aforesaid stand of the revenue, which is taken in the assessee’s own case for the AY 2018-19, treating the rejection of claim of exemption by the assessee u/s 10(2A) of the Act, while processing the return of assessee u/s 143(1) as a mistake apparent from record, therefore, the same cannot be construed as a mistake not apparent from record by the revenue authority in the year under consideration i.e., AY 2019-20. It was the submission, that all the necessary documents were viz. computation of total income, ITR, Tax Audit Report, Audited Accounts, etc. are duly submitted before the revenue authorities, and the assessee had claimed the exemption in ITR under Schedule BP- “Computation of Income from business or profession”, at clause (a) of para 5 pertaining to share of income from firm(s), under the head “Income credited to profit & loss account (included in 1) which is exempt”, such fact is brought to our notice by producing the copy of ITR, wherein the assessee had claimed share of income from firms exempt in ITR at page 39 of the APB. It was therefore, the assertion that the mistake is apparent from record which were furnished by the assessee and available before the revenue authorities, accordingly, the order passed u/s 154 by the Ld. AO claiming that there is no mistake apparent from record is liable to be quashed and the 20 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur request of the assessee, claiming the exemption u/s 10(2A) merits to be allowed. 7.3 Ld. Sr. DR, on the other hand placed his reliance on the orders of revenue authorities. 7.4 We have considered the rival submissions, perused the material available on record and the contentions raised by the Ld. AR on behalf of the assessee inter alia reference to the decision by First Appellate Authority in a different year i.e., AY 2018-19 in assessee’s own case. Admittedly, the books of assessee are audited and the income received by the assessee in the form of share of profit from partnership firm are observed to be duly recorded in the P&L Account in the audited accounts. It is not the dispute between the assessee and the revenue that the exemption claimed by the assessee u/s 10(2A) is lawfully allowable or not. The controversy has cropped up on account the conviction of the revenue that the assessee failed to claim the exempt income in the prescribed schedule of return income, also such facts are not discernible from the P & L Account and computation of the assessee. Ld. CIT-DR has observed to the extent that, it appears that the said amount was never credit to P & L Account. 21 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur 7.5 Provisions of section 10(2A) are extracted to examine the eligibility of assessee to claim the share of profit received from partnership firm as exempt: 10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included— (1) ……….. (2) ……….. (2A) in the case of a person being a partner of a firm which is separately assessed as such, his share in the total income of the firm. Explanation.—For the purposes of this clause, the share of a partner in the total income of a firm separately assessed as such shall, notwithstanding anything contained in any other law, be an amount which bears to the total income of the firm the same proportion as the amount of his share in the profits of the firm in accordance with the partnership deed bears to such profits ; 7.6 From the aforesaid provisions of Act, the assessee is entitled to claim exemption regarding the share of profit received from partnership firm, wherein the assessee is a partner. Further, the computation of total income of the assessee is reflecting the fact that assessee had income generated through various partnership firms and had received share in the profit of such firms, which presupposes to be taxed in the hands of respective partnership firms, therefore, the same cannot be taxed again in 22 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur the hands of assessee. The exemption u/s 10(2A), therefore, shall be available to the assessee. So far as the order passed by the Ld. AO u/s 154 is concerned, with the satisfaction that there is no mistake apparent from record, which is further approved by the Ld. CIT(A) observing that there is no entry in the ITR of the assessee in exempt income schedule of the return of income, that the same is not clearly coming out from the profit and loss account and computation of the assessee, is a perverse observation, under misconceived and improper appreciation of facts on record. On perusal of the copy of ITR, Computation and Audited P & L account of the assessee, the inclusion of share of profit from partnership firm received from the assessee in the figure of profit for the year which is carried to computation and further the same was reduced from the profit while making the computation, also the same was claimed as exempt under the schedule “Income from business and profession”, is a fact born and apparent from record, which was there before the revenue authorities also. We, thus, in terms of such factual position in the present case, do not find any substances in the decision of Ld. CIT(A) to confer that there is no mistake apparent from record. Our conviction is further fortified, as the revenue itself had considered aforesaid preposition in assessee’s own case for assessment year 2018-19 to be a mistake apparent from record, which is rectifiable under the provisions of section 154. 23 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur 7.7 In view of the aforesaid facts and circumstances, Decision of Ld. CIT(A) and the order passed by Ld. AO u/s 154 are found to be bereft of merits, bad in law and liable to quashed. We, thus, in terms of aforesaid observations, set aside the order of Ld. CIT(A), quash the order u/s 154 and directed to allow the exemption u/s 10(2A) to the assessee with respect to share of profit received by the assessee from partnership firm in which the assessee is a partner. 7.8 In result, Ground No. 1 & 2 of the present appeal of assessee are allowed. 8. Ground No. 3, 4 & 5: Regarding addition made u/s 143(1) qua the employees’ contribution to provident fund paid beyond the stipulated date under the applicable statutes but within the due date of filing of return under Income Tax Act. 8.1 Ld. AR on the aforesaid issue have submitted that, the adjustment made u/s 143(1)(a) permits only prima facie adjustments, therefore, disallowance of employees share in provident fund is out of the ambit of adjustments completed u/s 143(1). It is submitted that the issue is highly debatable as on the date of intimation order passed u/s 143(1) i.e., 24 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur 06.05.2020, on account of divergent view taken by different High Courts, therefore, the adjustment is out of the scope of section 143(1)(a). Ld. AR further submitted that the order of Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. Vs. CIT [2022] 143 taxmann. Com 178 (SC) (Civil Appeal No. 2833 of 2016), vide order dated 12.10.2022, was not in pronounced while the intimation u/s 143(1)(a) was passed, therefore, the Ld. AO was not right in making the disallowance. Ld. AR placed his reliance on the order of ITAT, Raipur in the following cases: (i) Parva Buildcon vs DCIT, ITA No. 357/RPR/2023 dated 11.01.2024. (ii) Kunjbihari Agrawal, ITA No. 17-18/RPR/2024 dated 31.01.2024 8.2 Per contra, Ld. Sr. DR placed her reliance on the orders of revenue authorities. 8.3 We have considered the rival submission perused the material available on record and case laws relied upon by the parties. In this case, the assessee has placed his reliance on the order of ITAT, Raipur in the case of Parva Buildcon vs DCIT (supra) and Kunjbihari Agrawal (supra), however, subsequent to the orders relied upon by the Ld. AR, the issue has been deliberated upon by the Hon’ble Jurisdictional High Court of the Chhattisgarh in 25 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur the case of M/s BPS Infrastructure Vs. ITO, Ward-1(3), Raipur, Tax Case No, 87 of 2024, dated 12.04.2024, wherein it has been held that the issue of delayed payment of employees share of contribution towards ESI/PF is no more res integra in terms of principle of law laid down by the Hon’ble Apex Court in the case of Checkmate Services Pvt. Ltd. (supra), the relevant findings of Hon’ble Jurisdictional High Court in the case of M/s BPS Infrastructure Vs. ITO (supra) are as under: 13. As far as the issue involved pertaining to claiming of deduction under section 36 (1) (va) of the IT Act 1961 on delayed payment of employees share of contribution towards ESI/PF of Rs. 19,84,415, in the instant case is concerned is no more res integra. The Hon’ble Supreme Court has decided the legal issue on merits in the matter of Checkmate Services P. Ltd. v. Commissioner of Income Tax-1, {Civil Appeal No. 2833 of 2016, decided on 12.10.2022}, wherein at paragraphs 51 to 54, it was observed as under: “51. The analysis of the various judgments cited on behalf of the assessee i.e., Commissioner of Income-Tax v. Aimil Ltd. [2010] 321 ITR 508 (Delhi High Court); Commissioner of Income-Tax and another v. Sabari Enterprises [2008] 298 ITR 141 (Karnataka High Court).; Commissioner of Income Tax v. Pamwi Tissues Ltd. [2009] 313 ITR 137 (Bombay High Court).; Commissioner of Income-Tax, Udaipur v. Udaipur Dugdh Utpadak Sahakari Sandh Ltd. [2013] 35 taxmann.com 616 (Rajasthan High Court) and Nipso Polyfabriks (supra) would reveal that in all these cases, the High Courts principally relied upon omission of second proviso to Section 43B (b). No doubt, many of these decisions also dealt with Section 36(va) with its explanation. However, the primary consideration in all the judgments, cited by the assessee, was that they adopted the approach indicated in the ruling in Alom Extrusions. As noticed previously, Alom Extrutions did not consider the fact of the introduction of Section 2(24)(x) or in fact the 8 other provisions of the Act. 52. When Parliament introduced Section 43B, what was on the statute book, was only employer’s contribution (Section 34(1)(iv)). At that point in time, there was 26 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur no question of employee’s contribution being considered as part of the employer’s earning. On the application of the original principles of law it could have been treated only as receipts not amounting to income. When Parliament introduced the amendments in 1988-89, inserting Section 36(1)(va) and simultaneously inserting the second proviso of Section 43B, its intention was not to treat the disparate nature of the amounts, similarly. As discussed previously, the memorandum introducing the Finance Bill clearly stated that the provisions – especially second proviso to Section 43B - was introduced to ensure timely payments were made by the employer to the concerned fund (EPF, ESI, etc.) and avoid the mischief of employers retaining amounts for long periods. That Parliament intended to retain the separate character of these two amounts, is evident from the use of different language. Section 2(24)(x) too, deems amount received from the employees (whether the amount is received from the employee or by way of deduction authorized by the statute) as income - it is the character of the amount that is important, i.e., not income earned. Thus, amounts retained by the employer from out of the employee’s income by way of deduction etc. were treated as income in the hands of the employer. The significance of this provision is that on the one hand it brought into the fold of “income” amounts that were receipts or deductions from employees income; at the time, payment within the prescribed time – by way of contribution of the employees’ share to their credit with the relevant fund is to be treated as deduction (Section 36(1)(va)). The other important feature is that this distinction between the employers’ contribution (Section 36(1)(iv)) and employees’ contribution required to be deposited by the employer (Section 36(1)(va)) was maintained – and continues to be maintained. On the other hand, Section 43B covers all deductions that are permissible as expenditures, or out-goings forming part of the assessees’ liability. These include liabilities such as tax liability, cess duties etc. or interest liability having regard to the terms of the contract. Thus, timely payment of these alone entitle an assessee to the benefit of deduction from the total income. The essential objective of Section 43B is to ensure that if assessees are following the mercantile method of accounting, nevertheless, the deduction of such liabilities, based only on book entries, would not be given. To pass muster, actual payments were a necessary pre-condition for allowing the expenditure. 53. The distinction between an employer’s contribution which is its primary liability under law – in terms of Section 36(1)(iv), and its liability to deposit amounts received by it or deducted by it (Section 36(1)(va)) is, thus crucial. The former forms part of the employers’ income, and the later retains its character as an income (albeit deemed), by virtue of Section 2(24)(x) - unless the conditions spelt 27 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur by Explanation to Section 36(1)(va) are satisfied i.e., depositing such amount received or deducted from the employee on or before the due date. In other words, there is a marked distinction between the nature and character of the two amounts – the employer’s liability is to be paid out of its income whereas the second is deemed an income, by definition, since it is the deduction from the employees’ income and held in trust by the employer. This marked distinction has to be borne while interpreting the obligation of every assessee under Section 43B. 54. In the opinion of this Court, the reasoning in the impugned judgment that the non-obstante clause would not in any manner dilute or override the employer’s obligation to deposit the amounts retained by it or deducted by it from the employee’s income, unless the condition that it is deposited on or before the due date, is correct and justified. The non-obstante clause has to be understood in the context of the entire provision of Section 43B which is to ensure timely payment before the returns are filed, of certain liabilities which are to be borne by the assessee in the form of tax, interest payment and other statutory liability. In the case of these liabilities, what constitutes the due date is defined by the statute. Nevertheless, the assessees are given some leeway in that as long as deposits are made beyond the due date, but before the date of filing the return, the deduction is allowed. That, however, cannot apply in the case of amounts which are held in trust, as it is in the case of employees’ contributions- which are deducted from their income. They are not part of the assessee employer’s income, nor are they heads of deduction per se in the form of statutory pay out. They are others’ income, monies, only deemed to be income, with the object of ensuring that they are paid within the due date specified in the particular law. They have to be deposited in terms of such welfare enactments. It is upon deposit, in terms of those enactments and on or before the due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated as a deduction. Thus, it is an essential condition for the deduction that such amounts are deposited on or before the due date. If such interpretation were to be adopted, the non- obstante clause under Section 43B or anything contained in that provision would not absolve the assessee from its liability to deposit the employee’s contribution on or before the due date as a condition for deduction.” 14. Looking to the facts and circumstances of the case and law laid down by the Hon’ble Supreme Court in Checkmates Services (supra), the present appeal filed by the appellant is not only devoid of merits but also barred by limitation as provided under Section 253 of the Act. The learned ITAT has rightly dismissed the appeal of 28 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur the assessee. We, therefore, are not persuaded to differ with the view taken by the ITAT and the reason assigned thereof. 8.4 Respectfully following the aforesaid decision granted by the Hon’ble Jurisdictional High Court, we are of the considered view that the payments qua the employees’ contribution to provident fund made after the due date under the relevant statutes shall be liable to be disallowed, even if the ITR is processed u/s 143(1) prior to the pronouncement of Judgment of Hon’ble Apex Court in the case of Checkmate(supra). In view of such observations the decision of Ld. CIT(A) following various judicial pronouncement including the law laid down by Hon’ble Apex Court in Checkmate (supra), was justified well- reasoned and acceptable. 8.5 Our aforesaid view is further fortified by the Latest judgment of Hon’ble Mumbai High Court in the case of Rohan Korgaonkar vs DCIT (2024) 159 taxmann.com 321 (Bombay) dtd 07.02.2024, wherein Hon’ble Court on the issue in hand has held as under: 8. Checkmate Services (P). Ltd. (Supra) holds that the deductions can be claimed, or adjustments can be made under section 141(I)(a)(iv), read with section 36(1)(va) only when the employer deposits the contributions in the employee’s accounts on or before the due date prescribed under the Employee’s Provident Fund / Employees State Insurance Act. In this case, admittedly, the contributions were deposited in employees’ accounts beyond the due date. The circumstances that the assessment order was made u/s 143(1)(a) of the Act cannot make any difference. 29 ITA No.433/RPR/2024 Jalaram Transport vs ACIT, Circle-1(1), Bilaspur 8.6 In backdrop of aforesaid observations, we are of the considered view that the issue raised by the assessee assailing the applicability of the decision of Hon’ble Apex Court in the case of Checkmate (supra), qua the disallowance regarding employee’s contribution to provident fund under the provisions of section 143(1) on a date prior to the date of the order of Hon’ble Apex Court cannot be accepted and allowed. Consequently, ground no. 3, 4 & 5 of the present appeal of assessee stands dismissed. 9. In the result, appeal of the assessee is partly allowed, in terms of our aforesaid observations. Order pronounced in the open court on 23/12/2024. Sd/- (RAVISH SOOD) Sd/- (ARUN KHODPIA) Ɋाियक सद˟ / JUDICIAL MEMBER लेखा सद˟ / ACCOUNTANT MEMBER रायपुर/Raipur; िदनांक Dated 23/12/2024 Vaibhav Shrivastav आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : आदेशानुसार/ BY ORDER, (Senior Private Secretary) आयकर अपीलीय अिधकरण, रायपुर/ITAT, Raipur 1. अपीलाथŎ / The Appellant- Jalaram Transport 2. ŮȑथŎ / The Respondent- ACIT, Circle-1(1), Bilaspur 3. The Pr. CIT, Raipur (C.G.) 4. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur 5. गाडŊ फाईल / Guard file. // स×याǒपत Ĥित True copy // "