KAMAKSHI JUTE INDUSTRIES LTD.,KOLKATA V. D.C.I.T., CPC, BENGALURU, BENGALURU

ITA 69/KOL/2023

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Kamakshi Jute Industries Ltd. appealed against the order of the Commissioner of Income Tax (Appeals)-NFAC, which confirmed the addition of Rs.37,68,900 to the assessee's income for the Assessment Year 2018-19. This addition was initially made by the D.C.I.T., CPC, Bengaluru, due to the alleged late deposit of employees' contributions to Provident Fund and Employees State Insurance, which were claimed to be deposited before the due date of furnishing the return of income. The Tribunal examined the timing of these deposits and the applicability of Section 36(1)(va) of the Income Tax Act, 1961, in light of the Supreme Court's decision in Checkmate Services P. Ltd. vs. CIT. The Tribunal also addressed the issue of incorrect TAN leading to disallowance of TDS credit.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 781217 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-10-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Appeal Filed On: 27-01-2023
• Other Referred Cases: Checkmate Services P. Ltd. Vs. Commissioner of Income-tax-1, Payal Enterprise vs. Dy. Commissioner of Income Tax, Central Circle, Kanoi Paper & Industries Ltd. vs. ACIT, The Master Polishers vs. ADIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Set aside; TDS; FORM 26AS
• Section: 43B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘SMC’ BENCH, KOLKATA Before SHRI SONJOY SARMA, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 69/KOL/2023 Assessment Year: 2018-19 Kamakshi Jute Industries Ltd. Vs. D.C.I.T., CPC, Bengaluru (Appellant) (Respondent) PAN: AACCK4928Q Appearances: Assessee represented by : Miraz D. Shah, AR. Department represented by : Ranu Biswas, Addl. CIT, Sr. DR. Date of concluding the hearing : 31-July-2025 Date of pronouncing the order : 23-October-2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2018-19 dated 28.11.2022, which has been passed against the intimation u/s 143(1) of the Act, dated 16.10.2019. 2. The assessee is in appeal before the Bench raising the following grounds of appeal: “1. That the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre erred in facts and on law in confirming the addition made in the intimation U/s 143(1) issued by the Ld. DCIT, CPC when the same was unlawful and arbitrary as the issue involved was debatable on facts and law. Printed from counselvise.com Page | 2 I.T.A. No.: 69/KOL/2023 Assessment Year: 2018-19 Kamakshi Jute Industries Ltd. 2. That the Ld. CIT (Appeals), NFAC erred in facts and on law in in confirming the addition of Rs.37,68,900 made by the Ld. DCIT, CPC invoking the provisions of section 43B of the Income Tax Act, 1961 read with sections 2(24)(x) and 36(1)(va) for the alleged delay in depositing the Employees Contribution to Provident Fund and Employees State Insurance under the relevant Act but deposited before the due date of furnishing the return of income. 3. That the Ld. CIT(A) erred in facts and on law in confirming the addition of employee contribution to PF/ESI U/s 36(1)(va) when the due date of making payment from 15 days from the close of the month is to be reckoned from the date of payment of salary/wages to employees and not from the date when salaries become due. 4. That the appellant be given credit of TDS of Rs. 45,308/- wrongly disallowed in the intimation on account of inadvertence in quoting of TAN in ITR-6 when the correct TAN was available with the Ld. DCIT, CPC from Form 26AS. 5. That the assessee craves leave to add, amend, alter, vary or withdraw any or all the grounds of appeal before or at the time of hearing of appeal.” 3. Brief facts of the case are that the assessee had filed the return of income u/s 139(1) of the Act for the AY 2018-19 showing ‘NIL’ income after considering deductions under chapter VI-A. The return was processed u/s 143(1) of the Act and the total income of the assessee was assessed at ₹37,68,900/- after making adjustment of ₹37,68,900/- on account of contribution of EPF/ESI of employees which was deposited beyond the due date of respective Acts while the assessee claimed that the same had been deposited in the Government account before filing of the return of income u/s 139(1) of the Act. Aggrieved with the intimation, the assessee filed an appeal before the Ld. CIT(A) who examined the reply filed by the assessee and the provisions of the Act, specifically section 43B of the Act, judicial pronouncements in this regard but he was of the view that the assessee was not entitled to the deduction u/s 36(1)(va) of the Act. His decision was based upon the Hon'ble Supreme Court’s decision in the case of Checkmate Services P. Printed from counselvise.com Page | 3 I.T.A. No.: 69/KOL/2023 Assessment Year: 2018-19 Kamakshi Jute Industries Ltd. Ltd. Vs. Commissioner of Income-tax-1 with C.A. No. 2830/2016, C.A. No. 159/2019, C.A. No. 2832/2016, C.A. No. 2831/2016 in which it is held that the amounts deducted from the employees’ income and which were employees’ contribution were to be mandatorily deposited on or before the due date under the respective Act, if the same were to be allowed as a deduction and the assessee having failed to do so, the same could not be allowed as a deduction. Accordingly, the appeal was dismissed on merits. It was also held that there arose no reason for condoning the delay thereby implying that the appeal was dismissed on account of delay as well. 4. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal. 5. Rival contentions were heard and the submissions made have been examined. Ground No. 1 is related to the issue involved being debatable on facts and in law and the addition made in the intimation issued under section 143(1) of the Act being unlawful and arbitrary. In this respect, the coordinate Bench of the Tribunal in the assessee’s own case for A.Y. 2019-20 on similar facts in Kamakshi Jute Industries Ltd. v. DCIT, CPC, Bengaluru [2024] 162 taxmann.com 196 (Kolkata – Trib.) vide order dated 22/02/2024 in respect of the intimation u/s 143(1) of the Act has held that if the employees’ contribution is not deposited as per the mandate of section 36(1)(va) of the Act, the deduction of the same would not be available to the assessee. Hence, following the decision of the coordinate Bench, this ground of appeal is dismissed. 6. Ground nos. 2 and 3 are regarding adjustment/disallowance of ₹37,68,900/- made to the income of the assessee. Before us, the Ld. AR Printed from counselvise.com Page | 4 I.T.A. No.: 69/KOL/2023 Assessment Year: 2018-19 Kamakshi Jute Industries Ltd. submitted that the issue relates to disallowance of the employees' contribution of ESI and PF. It was stated that the return of income was filed on 30.10.2018 and the processing was carried out u/s 143(1) of the Act on 16.10.2018. In Ground no. 3, the assessee has contended that the due date for making payment is within 15 days from the close of the month, which is to be reckoned from the date of payment of salary/wages to the employees and not from the date when salary becomes due. This issue has been considered by the Coordinate Bench in the case of Payal Enterprise vs. Dy. Commissioner of Income Tax, Central Circle, ITA No. 1203/KOL/2024 order dated 25.11.2024 in which it has been held as under: “6. The ld. AR stated that he was not disputing the payments in respect of Sl. Nos. 1, 2 & 3 for EPFO which was admittedly belated and therefore, not allowable u/s 36(1)(va) r.w.s. 2(24)(x) of the Act and also in respect of ESIC at Sl. Nos. 1, 2 & 4 but requested that as the dues for the month of October 2020 relating to EPFO at Sl. No. 4 and that relating to ESIC at Sl. No. 3 for the month of October, 2020 [which is erroneously mentioned as May, 20 in the order of the Ld. CIT(A)] were paid in time, therefore, the same were allowable as a deduction as according to Section 38 of the PF Act, 1952, the due date is to be reckoned from the month in which salary is paid and not from the month for which the salary is due. Since the salary for October, 20 was paid in the month of November, the payment made on 17.11.2020 for amounts of Rs. 6,09,233/- and Rs. 46,787/- respectively was allowable as a deduction. He placed reliance on the decision of the Coordinate Benches in the case of Kanoi Paper & Industries Ltd. vs. ACIT reported in (2022) 75 TTJ (CAL) 448 as well as the in the case of The Master Polishers vs. ADIT in ITA No. 252/MUM/2023 order dated 26.04.2023 and our attention was drawn to para 2 on Page 2 of the order placed at page 48 of the paper book in support of the claim. 6.1. We have considered the submission made In this respect, Section 38 of The Employees’ Provident Funds Scheme, 1952 is reproduced as under: “38. Mode of payment of contributions (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 well as an administrative charge of such percentage of Printed from counselvise.com Page | 5 I.T.A. No.: 69/KOL/2023 Assessment Year: 2018-19 Kamakshi Jute Industries Ltd. 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 excluded employee and in respect of which provident fund contribution payable, 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] or through PayGov platform or through scheduled banks in India including private sector banks 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.” {Emphasis supplied} 6.2. Thus, as per the Scheme of EPF, the liability of deposit of EPF arises on payment of salary/wages to the employee and as the disbursement is made in the next month and was made in the month of November, 2020, the due date of deposit was 15th December, 2020 and therefore, the payment made on 17.11.2020 was within time and, therefore, allowable u/s 36(1)(va) of the Act. Similar finding was also made by the Coordinate Benches in the case of Kanoi Paper & Industries Ltd. (supra) and The Master Polishers (supra). Hence, Ground nos. 2 & 3 of the appeal are allowed and the Ld. AO is directed to allow deduction of Rs. 6,09,233/- and 46,787/- for EPFO and ESIC respectively relating to the payment of salary/wages for the month of October, 2020 after receipt and verification of required documents from the assessee in support of the claim that the payment of wages/salary was made in the month of November for the salary/wages due for the month of October, 2020 and delete the addition made to this extent.” 7. The issue needs examination and the matter is remanded to the Ld. AO for examining the provisions of the relevant Acts and to consider whether the payments were made in time so as to allow the deduction to the assessee. The assessee is directed to produce the challans and other evidence for the payment of salary and the payment of ESI/PF to the concerned authorities. As per the statement of fact, the assessee has filed the date of deduction and the date of deposit for the payments made on different dates, which shall be examined by the Ld. AO and necessary relief as per the directions given above shall be allowed. In view of the decision of the Hon'ble Supreme Court in the case of Printed from counselvise.com Page | 6 I.T.A. No.: 69/KOL/2023 Assessment Year: 2018-19 Kamakshi Jute Industries Ltd. Checkmate Services P. Ltd vs. CIT [2022] 143 taxmann.com 178 (SC), the employees' contribution is to be treated as the income of the assessee if it is not deposited within the due date. However, the Ld. AO shall examine the facts of the case again and if the payments have been made within the due dates as per the provisions of the Provident Fund Act/ESI Act, he is directed to allow the same as a deduction u/s 36(1)(va) of the Act to the extent of such payments and the rest of the additions shall be confirmed. Accordingly, both these grounds of appeal are partly allowed for statistical purposes 8. Ground no. 4 is regarding the credit of TDS of ₹45,308/- disallowed in the intimation on account of inadvertence in quoting of TAN in ITR-6 when the correct TAN was available with the Ld. AO as per Form No. 26AS. This issue is also set aside to the Ld. AO for verification and in case the TDS made is visible in Form No. 26AS as per the evidence to be filed by the assessee, he is directed to allow the credit of the TDS made. 9. Ground No. 5 is general in nature and does not require any separate adjudication. 10. In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 23rd October, 2025. Sd/- Sd/- [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 23.10.2025 Bidhan (Sr. P.S.) Printed from counselvise.com Page | 7 I.T.A. No.: 69/KOL/2023 Assessment Year: 2018-19 Kamakshi Jute Industries Ltd. Copy of the order forwarded to: 1. Kamakshi Jute Industries Ltd., 16A, Brabourne Road, Near Tea Board, Kolkata, West Bengal, 700001. 2. D.C.I.T., CPC, Bengaluru. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata Printed from counselvise.com "