M.S. VIGILANT SECURITY PLACEMENT AND DETECTIVE SERVICES (P) LTD.,NEW DELHI V. DCIT, CIRCLE 16(1), DELHI, NEW DELHI

ITA 696/DEL/2024

AI Insights

The case involves M/s. M.S. Vigilant Security Placement & Detective Services (P) Ltd., the appellant, contesting the disallowance of their ESI/PF contributions amounting to Rs.3,25,94,778 for the assessment year 2020-21. The contributions were disallowed by the lower authorities under section 143(1) of the Income-tax Act, 1961, which was upheld in the appellate proceedings. The tribunal referenced the Supreme Court's decision in Checkmate Services Pvt Ltd Vs. CIT, which established that such contributions must be deposited by the 'due' date as prescribed by the relevant statutes, not later than the filing of the income tax return under section 139(1) of the Act. The tribunal also considered the assessee's argument that the 'due' date should be from the date of actual salary payment, citing a Calcutta Tribunal decision, which the tribunal partly accepted.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473560 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2020-2021
• Other Referred Cases: Checkmate Services Pvt Ltd Vs. CIT [2022] 143 taxmann.com 278 (SC), Kanoi Paper & Industries Ltd. Vs. ACIT (2002) 75 TTJ 0448 (Cal)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMIT KATOCH
• Assessee Lawyers: RAKESH GUPTA
• Section: 154; 143(1); 139(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘E’ NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.696/Del/2024 Assessment Year: 2020-21 M/s. M.S. Vigilant Security Placement & Detective Services (P) Ltd., P-23, Lajpat Nagar-IV, New Delhi Vs. DCIT, Circle-16(1), Delhi PAN: AADCM0029R (Appellant) (Respondent) ORDER PER SATBEER SINGH GODARA, JM This assessee’s appeal for assessment year 2020-21, arises against the Commissioner of Income Tax (Appeals)/Addl./Joint Commissioner of Income Tax [in short, the “CIT(A)/JCIT”], Coimbatore’s DIN and order no. ITBA/APL/S/250/2023- 24/1060345693(1), dated 31.01.2024 involving proceedings under section 143(1) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). Assessee by Dr. Rakesh Gupta, Adv. Sh. Deepesh Garg, Adv. Department by Sh. Amit Katoch, Sr. DR Date of hearing 26.03.2025 Date of pronouncement 04.04.2025 ITA No.696/Del/2024 2 | P a g e 2. Heard both the parties. Case file perused. 3. The assessee’s first and foremost substantive ground raised in the instant appeal challenge correctness of both the learned lower authorities’ action disallowing its ESI/PF contribution pertaining to employees, amounting to Rs.3,25,94,778/-, made during the course of assessment and upheld in the lower appellate proceedings. 4. Suffice to say, it has already come on record and fairly conceded at the assessee’s behest that it’s instant first and foremost substantive ground hardly carries any merit in principle as per Checkmate Services Pvt Ltd Vs. CIT [2022] 143 taxmann.com 278 (SC) settling the issue in the department’s favour that such a contribution ought to be deposited in the prescribed account on or before “due” date in the corresponding statute than that of filing return of income under section 139(1) of the Act. That being the case, we find no merit in the assessee’s instant substantive ground in principle. 5. Learned counsel submits that the above “due” date has to be reckoned from the date of actual payment of salary in light of Kanoi ITA No.696/Del/2024 3 | P a g e Paper & Industries Ltd. Vs. ACIT (2002) 75 TTJ 0448 (Cal), as under: “Clause 38 of the Employees' Provident Fund Scheme, 1952, fixes the time-limit for making payment in respect of contribution to the provident fund to be 15 days from the close of the month concerned. However, the issue here is whether the \"month\" should be considered to be the month to which the wages relates or the month in which the actual disbursement of the wages is made, we are of the considered opinion that the expression \"month\" should mean here the month during which the wages/salary is actually disbursed irrespective of month to which the same relates. Thus, the scheme of the Government in this regard is that once a deduction is made f respect of the employees' contribution to the provident fund from the salary/wages of the employee or the employer also makes his contribution, factually at the time of disbursement of the salary the payment in respect of such contribution should be made forthwith. If for some reason or other the payment of salary for a particular month be held up for considerable period of time it cannot be said that the employer would be liable to make payments in respect of the \"employer's\" as well as \"employees\" contribution in respect of wages for such period within a period of 15 days from the close of the month to which the wages relate. On the other hand, in our view, most appropriate interpretation would be that the employer would be at liberty to make payment of the contribution concerned within 15 days (subject however to the further grace period) from the end of the month during which the disbursement of the salary is actually made and the contribution of the provident fund are, thus, generated, inasmuch as, the provision relating to the disallowance of such contribution on account of delay is rather an artificial provision, In our view, a liberal approach has got to be made to this issue. Ultimately, therefore, we reverse the order of the lower authorities and direct the AO to examine whether the payments of contribution in the present case were made within 15 days (allowed with further grace period of 5 days) from the close of the respective months during which the disbursement of the salary/wages were actually made. The AO should recompute the amount disallowable, if any, on the above basis and take appropriate action accordingly.” ITA No.696/Del/2024 4 | P a g e 6. The assessee’s instant first substantive ground is partly accepted for statistical purposes to this limited extent, in very terms. 7. Next substantive issue between the parties is that of credit of prepaid taxes as claimed at the assessee’s behest. Both the learned representatives are very fair that the same requires Assessing Officer’s factual verification and computation than our second appellate adjudication. We accordingly restore the assessee’s instant second substantive ground back to the Assessing Officer in very terms. 8. Learned counsel lastly contends that the assessee’s section 154 rectification claiming the benefit of section 115BAA already stand accepted by the departmental authorities. We accordingly reject the assessee’s instant last substantive ground as rendered infructuous. 9. This assessee’s appeal is partly allowed for statistical purposes, in above terms. Order pronounced in the open court on 4th April, 2025 Sd/- Sd/- (MANISH AGARWAL) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 4th April, 2025. ITA No.696/Del/2024 5 | P a g e RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi "