INCOME TAX OFFICER WARD-41(3)(1), MUMBAI V. DIPEN KUMARPAL PAREKH, MUMBAI

MA 338/MUM/2023

AI Insights

The case revolves around the Miscellaneous Application filed by the Revenue seeking recall/rectification of the Tribunal's earlier order which had deleted the disallowance made under section 36(1)(va) of the Income Tax Act concerning employees' contributions to PF/ESI. The Tribunal initially followed a precedent that allowed such deductions if the contributions were made by the due date of filing the return. However, following the Supreme Court's decision in Checkmate Services Pvt. Ltd. v. CIT, which held that such contributions are to be treated as deemed income if not deposited by the due date, the Tribunal recalled its earlier order and dismissed the assessee's appeal, aligning with the Supreme Court's retrospective application of the law.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123331 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 29-08-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 10-08-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 25-04-2023
• Other Referred Cases: Checkmate Services Pvt. Ltd. v. CIT, Kalpesh Synthetic Pvt. Ltd., M/s Salasar Balaji Ship Breakers Pvt. Ltd. v. ACIT, ACIT v. Saurashtra Kutch Stock Exchange Ltd., Suhrid Geigy Limited v. Commissioner of Surtax, Gujarat, Union of India v. Golak Nath
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Deemed to accrue or arise in india; FORM 26AS
• Section: 43B; 10AA; 143(1); 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “D” MUMBAI BEFORE SHRI AMIT SHUKLA (JUDICIAL MEMBER) AND SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) M.A. No. 338/MUM/2023 (Arising out of ITA No. 1703/MUM/2022) Assessment Year: 2019-2020 ITO Ward- 41(3)(1), Room No. 753, 7 th floor, G- Block, Kautilya Bhavan, Bandra Kurla Complex, Bandra (East), Mumbai-400051. Vs. Dipen Kumarpal Parekh, 603, Patel Niwas, Sainath Road, Malad (West), Mumbai-400604. PAN No. AADPP 6112 D Appellant Respondent ITA No. 1703/MUM/2022 Assessment Year: 2019-2020 Dipen Kumarpal Parekh, 603, Patel Niwas, Sainath Road, Malad (West), Mumbai-400604. Vs. Assessing Officer National Faceless Centre, New Delhi. PAN No. AADPP 6112 D Appellant Respondent Assessee by : None Revenue by : Mr. P.D. Chougule, DR Date of Hearing : 11/08/2023 Date of pronouncement : 30/08/2023 PER OM PRAKASH KANT, AM By way of this Miscellaneous Application, the Revenue is seeking recall/rectification of the order of the Tribunal dated 07.09.2022 passed in ITA No. 1703/Mum/2022 for assessment year 2019-2020. 2. Before us, the Ld. Departmental Representative (DR) submitted that order passed by the Tribunal dated 07.09.2022 was received in the office of the Pr. CIT view of the communication of the order to the appellant on 15.12.2022, this Miscellaneous Application filed on 20.04.2023 is within the limitation period and therefore, same is admitted for adjudication. 2.1 Before us, the Ld. DR referred to the para No. 5 of the order the Tribunal(supra), wherein the Coordinate bench (supra) and deleted the disallowance made u/s 36(1)(via) of the Act on account of employees contribution to PF/ESI. It was held by the Tribunal that disallowance of employees contribution to PF/ESI was not maintainable under the provis The Ld. DR referred to the decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. v. CIT in 143 ORDER PER OM PRAKASH KANT, AM By way of this Miscellaneous Application, the Revenue is seeking recall/rectification of the order of the Tribunal dated 07.09.2022 passed in ITA No. 1703/Mum/2022 for assessment Before us, the Ld. Departmental Representative (DR) tted that order passed by the Tribunal dated 07.09.2022 was received in the office of the Pr. CIT-17, Mumbai on 15.12.2022. In view of the communication of the order to the appellant on this Miscellaneous Application filed on 20.04.2023 is in the limitation period and therefore, same is admitted for Before us, the Ld. DR referred to the para No. 5 of the order , wherein the Tribunal followed the decision of Coordinate bench in the case of Kalpesh Synthetic Pvt. Ltd. and deleted the disallowance made u/s 36(1)(via) of the Act on account of employees contribution to PF/ESI. It was held by the Tribunal that disallowance of employees contribution to PF/ESI was not maintainable under the provisions of section 143(1) of the Act. The Ld. DR referred to the decision of the Hon’ble Supreme Court in Checkmate Services Pvt. Ltd. v. CIT in 143 Dipen Kumarpal Parekh 2 M.A No. 338/Mum/2023 and ITA No. 1703/M/2022 By way of this Miscellaneous Application, the Revenue is seeking recall/rectification of the order of the Tribunal dated 07.09.2022 passed in ITA No. 1703/Mum/2022 for assessment Before us, the Ld. Departmental Representative (DR) tted that order passed by the Tribunal dated 07.09.2022 was 17, Mumbai on 15.12.2022. In view of the communication of the order to the appellant on this Miscellaneous Application filed on 20.04.2023 is in the limitation period and therefore, same is admitted for Before us, the Ld. DR referred to the para No. 5 of the order of followed the decision of Synthetic Pvt. Ltd. and deleted the disallowance made u/s 36(1)(via) of the Act on account of employees contribution to PF/ESI. It was held by the Tribunal that disallowance of employees contribution to PF/ESI was ions of section 143(1) of the Act. The Ld. DR referred to the decision of the Hon’ble Supreme Court in Checkmate Services Pvt. Ltd. v. CIT in 143 taxmann.com 178 (SC Supreme Court act retrospectively assessee being incorrect claim, t Act is justified. He accordingly submitted that order of the Tribunal (supra) need to be rectified or recall for deciding in the light of the decision of the Hon’ble Supreme Court. 3. We find that despite notifying none attended on behalf of the assessee therefore, the Miscellaneous Application was heard ex parte qua the assessee and after hearing the arguments of the Ld. DR. 4. We find that non High Court/Supreme Court record and it is rectifi Hon’ble Supreme Court in the case of Stock Exchange Ltd. (2008) 305 I Hon’ble Supreme Court held that even subsequent decision of the jurisdictional Court render mistake apparent on record u/s corrected by the Tribunal. The releva Supreme Court (supra) is reproduced as under: “41. A similar question came up for consideration before the High Court of Gujarat in Suhrid Geigy (1999) 237 ITR 834 (Guj). It was held by the Division Bench of the High Court that if the point is covered by a decision of the Jurisdictional Court rendered taxmann.com 178 (SC) and submitted that decision of the Hon’ble Supreme Court act retrospectively and hence the claim of the rrect claim, the disallowance u/s 143(1) of the Act is justified. He accordingly submitted that order of the Tribunal (supra) need to be rectified or recall for deciding in the light of the ble Supreme Court. We find that despite notifying none attended on behalf of the assessee therefore, the Miscellaneous Application was heard ex parte qua the assessee and after hearing the arguments of the Ld. We find that non-consideration of the decision of the Hon’ble High Court/Supreme Court constitute a mistake apparent from the record and it is rectifiable section 254(2) of the Act a Hon’ble Supreme Court in the case of ACIT v. Suarashtra Kutch Stock Exchange Ltd. (2008) 305 ITR 227 (SC). Hon’ble Supreme Court held that even non considering of a subsequent decision of the jurisdictional Court render mistake apparent on record u/s 254(2) of the Act and could be corrected by the Tribunal. The relevant finding of the Hon’ble Supreme Court (supra) is reproduced as under: 41. A similar question came up for consideration before the High Court Suhrid Geigy Limited v. Commissioner of Surtax, Gujarat (1999) 237 ITR 834 (Guj). It was held by the Division Bench of the High Court that if the point is covered by a decision of the Jurisdictional Court rendered prior or even subsequent to the order of rectifica Dipen Kumarpal Parekh 3 M.A No. 338/Mum/2023 and ITA No. 1703/M/2022 and submitted that decision of the Hon’ble and hence the claim of the he disallowance u/s 143(1) of the Act is justified. He accordingly submitted that order of the Tribunal (supra) need to be rectified or recall for deciding in the light of the We find that despite notifying none attended on behalf of the assessee therefore, the Miscellaneous Application was heard ex- parte qua the assessee and after hearing the arguments of the Ld. the decision of the Hon’ble constitute a mistake apparent from the able section 254(2) of the Act as held by the ACIT v. Suarashtra Kutch TR 227 (SC). Further, the non considering of a prior or subsequent decision of the jurisdictional Court renders it as a 254(2) of the Act and could be nt finding of the Hon’ble 41. A similar question came up for consideration before the High Court Limited v. Commissioner of Surtax, Gujarat, (1999) 237 ITR 834 (Guj). It was held by the Division Bench of the High Court that if the point is covered by a decision of the Jurisdictional prior or even subsequent to the order of rectification, it could be said to be "mistake apparent from the record" under 254 (2) of the Act and could be corrected by the Tribunal. 42. In our judgment, it is also well retrospectively. According to Blackstonian theory, it is not the function of the Court to pronounce a `new rule' but to maintain and expound the `old one'. In other words, Judges do not make law, they only discover or find the correct law. The law subsequent decision alters the earlier one, it (the later decision) does not make new law. It only discovers the correct principle of law which has to be applied retrospectively. To put it differently, even where an earlier decision of the Court operated for quite some time, the decision rendered later on would have retrospective effect clarifying the legal position which was earlier not correctly understood. 43. Salmond in his well "(T)he theory of case la merely declares it; and the overruling of a previous decision is a declaration that the supposed rule never was law. Hence any intermediate transactions made on the strength of the supposed rule are governed by the l decision. The overruling is retrospective, except as regards matters that are res judicatae or accounts that have been settled in the meantime". (emphasis supplied) 44. It is no doubt true that after a historic decision in Union of India, (1967) 2 SCR 762, this Court has accepted the doctrine of `prospective overruling'. It is based on the philosophy: "The past cannot always be erased by a new judicial declaration". It may, however, be stated that this is an ex doctrine of precedent. 4.1 We are of the opinion the Article 141 India, 1950 provides that law declared by the Supreme Court shall be binding in all courts within the territory of the India. The decision of the Hon’ble Supreme Court Act retrospectively because the decision only discovers be applied retrospectively unless specifically provided for prospective implementation. Accordingly, decision of Hon’ble Supreme Court in the case of Checkmate could be said to be "mistake apparent from the record" under (2) of the Act and could be corrected by the Tribunal. 42. In our judgment, it is also well- settled that a judicial decis retrospectively. According to Blackstonian theory, it is not the function of the Court to pronounce a `new rule' but to maintain and expound the `old one'. In other words, Judges do not make law, they only discover or find the correct law. The law has always been the same. If a subsequent decision alters the earlier one, it (the later decision) does not make new law. It only discovers the correct principle of law which has to be applied retrospectively. To put it differently, even where an earlier decision of the Court operated for quite some time, the decision rendered later on would have retrospective effect clarifying the position which was earlier not correctly understood. 43. Salmond in his well-known work states; "(T)he theory of case law is that a judge does not make law; he merely declares it; and the overruling of a previous decision is a declaration that the supposed rule never was law. Hence any intermediate transactions made on the strength of the supposed rule are governed by the law established in the overruling decision. The overruling is retrospective, except as regards matters that are res judicatae or accounts that have been settled in the meantime". (emphasis supplied) 44. It is no doubt true that after a historic decision in Golak Nath v. Union of India, (1967) 2 SCR 762, this Court has accepted the doctrine of `prospective overruling'. It is based on the philosophy: "The past cannot always be erased by a new judicial declaration". It may, however, be stated that this is an exception to the general rule of the doctrine of precedent.” e of the opinion the Article 141 of the Constitution of India, 1950 provides that law declared by the Supreme Court shall n all courts within the territory of the India. The cision of the Hon’ble Supreme Court Act retrospectively because decision only discovers the correct principle of law ,which be applied retrospectively unless specifically provided for prospective implementation. Accordingly, non consideration of decision of Hon’ble Supreme Court in the case of Checkmate Dipen Kumarpal Parekh 4 M.A No. 338/Mum/2023 and ITA No. 1703/M/2022 could be said to be "mistake apparent from the record" under Section settled that a judicial decision acts retrospectively. According to Blackstonian theory, it is not the function of the Court to pronounce a `new rule' but to maintain and expound the `old one'. In other words, Judges do not make law, they only discover or has always been the same. If a subsequent decision alters the earlier one, it (the later decision) does not make new law. It only discovers the correct principle of law which has to be applied retrospectively. To put it differently, even where an earlier decision of the Court operated for quite some time, the decision rendered later on would have retrospective effect clarifying the w is that a judge does not make law; he merely declares it; and the overruling of a previous decision is a declaration that the supposed rule never was law. Hence any intermediate transactions made on the strength of the supposed aw established in the overruling decision. The overruling is retrospective, except as regards matters that are res judicatae or accounts that have been settled Golak Nath v. Union of India, (1967) 2 SCR 762, this Court has accepted the doctrine of `prospective overruling'. It is based on the philosophy: "The past cannot always be erased by a new judicial declaration". It may, ception to the general rule of the of the Constitution of India, 1950 provides that law declared by the Supreme Court shall n all courts within the territory of the India. The cision of the Hon’ble Supreme Court Act retrospectively because principle of law ,which has to be applied retrospectively unless specifically provided for non consideration of the decision of Hon’ble Supreme Court in the case of Checkmate services p ltd (supra), there is mistake apparent from record, and hence the order of the Tribunal (supra) is recalled for adjudication. The Miscellaneous Application of the Revenue allowed. 5. We have heard the appeal of the assessee also. In view of the decision of the Hon’ble Supreme Court Ltd. v. CIT in 143 taxmann.com 178 (SC) employees contribution to PF/ESI is now rendered as incorrect claim under the provisions of section 143(1)(a)(ii) of the Act and therefore, same is liable to be disallowed. We find that the Tribunal in the case of M/s Salasar Balaji Ship B (ITA No. 1947/Mum/2021) dated 12.04.2023 for assessment year 2018-19 has upheld the disallowance observing as under: 5.2. After considering the submissions made by the assessee as well as the findings given in the impugned orders, dispute that employees’ contribution towards PF and ESI has been made late and beyond the due date respective acts. The issue whether, employees’ contribution of PF & ESI which has not been deposite acts and regulations, can it be treated as deemed income u/s. 2(24)(x) r.w.s. 36(1)(va). There were various sets of judgments in favour of the assessee including the judgment of Hon’ble jurisdictional High Court. r.w.s. 36(1)(va), wherein it was held that if employee's contribution towards PF and ESI has been deposited on or before due date of filing of return u/s 139(1), the same has to be allowed. However, the Hon'ble Supreme Court in the case of Checkmate Services reported in (2022) 448 ITR 518 (SC) held as under: 52. When Parliament introduced statute book, was only employer’s contribution ( 34(1)(iv) 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 services p ltd (supra), there is mistake apparent from record, and the order of the Tribunal (supra) is recalled for adjudication. The Miscellaneous Application of the Revenue We have heard the appeal of the assessee also. In view of the decision of the Hon’ble Supreme Court Checkmate Services Pvt. Ltd. v. CIT in 143 taxmann.com 178 (SC), the claim of the employees contribution to PF/ESI is now rendered as incorrect claim under the provisions of section 143(1)(a)(ii) of the Act and therefore, same is liable to be disallowed. We find that the Tribunal in the case of M/s Salasar Balaji Ship Breakers Pvt. Ltd. v. ACIT (ITA No. 1947/Mum/2021) dated 12.04.2023 for assessment year 19 has upheld the disallowance observing as under: 5.2. After considering the submissions made by the assessee as well as the findings given in the impugned orders, we find that there is no dispute that employees’ contribution towards PF and ESI has been made late and beyond the due date prescribed u/s.36(1)(va) of the respective acts. The issue whether, employees’ contribution of PF & ESI which has not been deposited before the due date under the relevant acts and regulations, can it be treated as deemed income u/s. 2(24)(x) r.w.s. 36(1)(va). There were various sets of judgments in favour of the assessee including the judgment of Hon’ble jurisdictional High Court. w.s. 36(1)(va), wherein it was held that if employee's contribution towards PF and ESI has been deposited on or before due date of filing of return u/s 139(1), the same has to be allowed. However, the Hon'ble Supreme Court in the case of Checkmate Services (P) Ltd. Vs. CIT reported in (2022) 448 ITR 518 (SC) held as under:- 52. When Parliament introduced Section 43B, what was on the statute book, was only employer’s contribution ( 34(1)(iv)). At that point in time, there was 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 Dipen Kumarpal Parekh 5 M.A No. 338/Mum/2023 and ITA No. 1703/M/2022 services p ltd (supra), there is mistake apparent from record, and the order of the Tribunal (supra) is recalled for adjudication. The Miscellaneous Application of the Revenue is accordingly We have heard the appeal of the assessee also. In view of the Checkmate Services Pvt. the claim of the employees contribution to PF/ESI is now rendered as incorrect claim under the provisions of section 143(1)(a)(ii) of the Act and therefore, same is liable to be disallowed. We find that the Tribunal reakers Pvt. Ltd. v. ACIT (ITA No. 1947/Mum/2021) dated 12.04.2023 for assessment year 19 has upheld the disallowance observing as under: 5.2. After considering the submissions made by the assessee as well as we find that there is no dispute that employees’ contribution towards PF and ESI has been prescribed u/s.36(1)(va) of the respective acts. The issue whether, employees’ contribution of PF & ESI d before the due date under the relevant acts and regulations, can it be treated as deemed income u/s. 2(24)(x) r.w.s. 36(1)(va). There were various sets of judgments in favour of the assessee including the judgment of Hon’ble jurisdictional High Court. w.s. 36(1)(va), wherein it was held that if employee's contribution towards PF and ESI has been deposited on or before due date of filing of return u/s 139(1), the same has to be allowed. However, the Hon'ble (P) Ltd. Vs. CIT , what was on the statute book, was only employer’s contribution (Section ). At that point in time, there was no question of employee’s contribution being considered as part of the employer’s earning. On the application of the original principles receipts not amounting to income. When Parliament introduced the amendments in 1988-89, inserting inserting the second proviso of not to treat the disparate nature of the amounts, similarly. As discussed previously, the memorandum introducing the Finance Bill clearly stated that the provisions to Section 43B 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 r character of these two amounts, is evident from the use of different language. from the employees (whether the amount is received from the employee or by way of deduction authorized by the statute) as income not income earned. Thus, amounts retained by the employer from out of the employee’s income by way of deduction etc. were treated 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 wa credit with the relevant fund is to be treated as deduction (Section 36(1)(va) distinction between the employer and employees’ contribution required to be deposited by the employer ( be maintained. On the other hand, deductions that are permissible as expenditures, or out forming part of the assessees’ liability. These include liabilities such as tax 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 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, payments were a necessary pre expenditure. 53. The distinction between an employer’s contribution which is its primary liability under law and its liability to deposit amounts received by it or deducted by it (Section 36(1)(va) employers’ income, and the later retains its character as an income conditions spelt by Explanation to satisfied i.e., depositing such 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 to income. When Parliament introduced the amendments in 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 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 loyee 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 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 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 continue be maintained. On the other hand, Section 43B deductions that are permissible as expenditures, or out 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 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, 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 Section 36(1)(va)) is, thus crucial. The former forms part of the employers’ income, and the later retains its character as an (albeit deemed), by virtue of Section 2(24)(x) conditions spelt by Explanation to Section 36(1)(va) 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 Dipen Kumarpal Parekh 6 M.A No. 338/Mum/2023 and ITA No. 1703/M/2022 to income. When Parliament introduced the amendments in and simultaneously , its intention was not to treat the disparate nature of the amounts, similarly. As discussed previously, the memorandum introducing the Finance especially second proviso 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 etain the separate character of these two amounts, is evident from the use of too, deems amount received from the employees (whether the amount is received from the loyee or by way of deduction authorized by the statute) as 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 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 y of contribution of the employees’ share to their credit with the relevant fund is to be treated as deduction ). The other important feature is that this Section 36(1)(iv)) and employees’ contribution required to be deposited by the and continues to Section 43B covers all deductions that are permissible as expenditures, or out-goings forming part of the assessees’ liability. These include liabilities 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 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 condition for allowing the 53. The distinction between an employer’s contribution which is Section 36(1)(iv), and its liability to deposit amounts received by it or deducted by ) is, thus crucial. The former forms part of the employers’ income, and the later retains its character as an - unless the Section 36(1)(va) are nt 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 the employer’s liability is to be paid out of its income whereas the second is deemed a 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 dilute or override the employer’s obligation to deposit the amounts retained by it or deducted by it from the e income, unless the condition that it is deposited on or before the due date, is correct and justified. The non be understood in the context of the entire provision of 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 d 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 am which are held in trust, as it is in the case of employees’ contributions 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 enactme 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 befo such interpretation were to be adopted, the non under Section 43B would not absolve the assessee from its liability to deposit th employee’s contribution on or before the due date as a condition for deduction. 55. In the light of the above reasoning, this court is of the opinion that there is no infirmity in the approach of the impugned judgment. The decisions of the other High Cou holding to the contrary, do not lay down the correct law. For these reasons, this court does not find any reason to interfere with the impugned judgment. The appeals are accordingly dismissed. 6. The Hon'ble Supreme Court has considered the judgments Court and analyzed the provisions of the law contained in section 2(24)(x), 36(1)(va) and 43B, and had come to the conclusion that if the 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 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 e 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 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 d 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 am 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 hers’ 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 interpretation were to be adopted, the non-obstante clause Section 43B or anything contained in that provision would not absolve the assessee from its liability to deposit th employee’s contribution on or before the due date as a condition for deduction. 55. In the light of the above reasoning, this court is of the opinion that there is no infirmity in the approach of the impugned judgment. The decisions of the other High Cou holding to the contrary, do not lay down the correct law. For these reasons, this court does not find any reason to interfere with the impugned judgment. The appeals are accordingly dismissed. 6. The Hon'ble Supreme Court has considered the judgments Court and analyzed the provisions of the law contained in section 2(24)(x), 36(1)(va) and 43B, and had come to the conclusion that if the Dipen Kumarpal Parekh 7 M.A No. 338/Mum/2023 and ITA No. 1703/M/2022 n 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 54. In the opinion of this Court, the reasoning in the impugned 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 obstante clause has to be understood in the context of the entire provision of Section 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’ 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 hers’ 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 nts 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 re the due date. If obstante clause 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 55. In the light of the above reasoning, this court is of the opinion that there is no infirmity in the approach of the impugned judgment. The decisions of the other High Courts, holding to the contrary, do not lay down the correct law. For these reasons, this court does not find any reason to interfere with the impugned judgment. The appeals are accordingly 6. The Hon'ble Supreme Court has considered the judgments of the High Court and analyzed the provisions of the law contained in section 2(24)(x), 36(1)(va) and 43B, and had come to the conclusion that if the deposit has been made after the due date prescribed under respective Acts, the same is not allowable. It i Supreme Court has decided and settled the issue, then it becomes the law of the land and it has to be interpreted and understood as if it was from the date of the enactment of the statute/provisions. Once the delayed payment of employee's contribution to PF and ESI beyond the due date of respective Acts, has been interpreted to be deemed income, then the same is not allowable claim, therefore no such deduction of claim can be allowed. In fact, it tantamount to incorrect c the return of income, which can be adjusted or disallowed. The scope of adjustments under Section 143(1)(a) reads as under: 143. (1) Where a return has been made under section 139, or in response to a notice under sub return shall be processed in the following manner, namely: (a) the total income or loss shall be computed after making the following adjustments, namely: (i) any arithmetical error in the return; (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub (iv) disallowance of expenditure [or increase in income] indicated in the audit report but not taken into account in computing the total income in the return; (v) disallowance of deduction claimed under [section 10AA or under any of t "C.—Deductions in respect of certain incomes", if] the return is furnished beyond the due date specified under subsection (1) of section 139; or (vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return: Provided that no such adjustments shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode: Provided further t any, shall be considered before making any adjustment, and in deposit has been made after the due date prescribed under respective Acts, the same is not allowable. It is a trite law that once the Hon'ble Supreme Court has decided and settled the issue, then it becomes the law of the land and it has to be interpreted and understood as if it was from the date of the enactment of the statute/provisions. Once the ment of employee's contribution to PF and ESI beyond the due date of respective Acts, has been interpreted to be deemed income, then the same is not allowable claim, therefore no such deduction of claim can be allowed. In fact, it tantamount to incorrect claim made in the return of income, which can be adjusted or disallowed. The scope of adjustments under Section 143(1)(a) reads as under:- 143. (1) Where a return has been made under section 139, or in response to a notice under sub-section (1) of section return shall be processed in the following manner, namely: (a) the total income or loss shall be computed after making the following adjustments, namely:— (i) any arithmetical error in the return; incorrect claim, if such incorrect claim is apparent from any information in the return; (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139; (iv) disallowance of expenditure [or increase in income] indicated in the audit report but not taken into account in computing the total income in the return; (v) disallowance of deduction claimed under [section 10AA or under any of the provisions of Chapter VI-A under the heading Deductions in respect of certain incomes", if] the return is furnished beyond the due date specified under subsection (1) of section 139; or (vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return: Provided that no such adjustments shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode: Provided further that the response received from the assessee, if any, shall be considered before making any adjustment, and in Dipen Kumarpal Parekh 8 M.A No. 338/Mum/2023 and ITA No. 1703/M/2022 deposit has been made after the due date prescribed under respective s a trite law that once the Hon'ble Supreme Court has decided and settled the issue, then it becomes the law of the land and it has to be interpreted and understood as if it was from the date of the enactment of the statute/provisions. Once the ment of employee's contribution to PF and ESI beyond the due date of respective Acts, has been interpreted to be deemed income, then the same is not allowable claim, therefore no such deduction of laim made in the return of income, which can be adjusted or disallowed. The scope of 143. (1) Where a return has been made under section 139, or in section (1) of section 142, such return shall be processed in the following manner, namely:— (a) the total income or loss shall be computed after making the incorrect claim, if such incorrect claim is apparent (iii) disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the (1) of section 139; (iv) disallowance of expenditure [or increase in income] indicated in the audit report but not taken into account in computing the (v) disallowance of deduction claimed under [section 10AA or A under the heading Deductions in respect of certain incomes", if] the return is furnished beyond the due date specified under subsection (1) of (vi) addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total Provided that no such adjustments shall be made unless an intimation is given to the assessee of such adjustments either in hat the response received from the assessee, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such intimation, such adjustments shall be made: 7. Ergo, once there is i then the section provides that adjustment has to be made. The Auditor in the audited accounts only points out the date of payment and the due date prescribed under the respective Act (PF and ESI Act) and i incumbent upon the assessee that, while computing the income he has to disallow the said payment, if it has been made beyond the due date. Thus, in view of the judgment of Hon’ble Apex Court, such claim cannot be allowed as it is an incorrect claim an of prima facie adjustment u/s.143(1). Accordingly, we confirm the order of the ld. CIT (A) holding that once the Hon’ble Apex Court has settled the issue, then that is the law which is applicable retrospectively and therefore, any such claim contribution to PF & ESI beyond the due dates given in the respective acts as given in 36(1)(va) is incorrect claim which needs to be disallowed / adjusted even within the scope of prima facie disput u/s.143(1). Therefore, disallowance has rightly been made by CPC, Bangalore.” 5.1 Respectfully following the above, the grounds of appeal of the assessee for claim of employees contribution to Rs.7,86,220/- are dismissed. 6. In the result, the appeal of the assessee is dismissed. Order pronounced in the open Court on Sd/ (AMIT SHUKLA JUDICIAL MEMBER Mumbai; Dated: 30/08/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. a case where no response is received within thirty days of the issue of such intimation, such adjustments shall be made: 7. Ergo, once there is incorrect claim apparent from the return of income, then the section provides that adjustment has to be made. The Auditor in the audited accounts only points out the date of payment and the due date prescribed under the respective Act (PF and ESI Act) and i incumbent upon the assessee that, while computing the income he has to disallow the said payment, if it has been made beyond the due date. Thus, in view of the judgment of Hon’ble Apex Court, such claim cannot be allowed as it is an incorrect claim and therefore, it falls within scope of prima facie adjustment u/s.143(1). Accordingly, we confirm the order of the ld. CIT (A) holding that once the Hon’ble Apex Court has settled the issue, then that is the law which is applicable retrospectively and fore, any such claim of payment on account of employees’ contribution to PF & ESI beyond the due dates given in the respective acts as given in 36(1)(va) is incorrect claim which needs to be disallowed / adjusted even within the scope of prima facie disput u/s.143(1). Therefore, disallowance has rightly been made by CPC, Respectfully following the above, the grounds of appeal of the assessee for claim of employees contribution to PF/ESI amounting are dismissed. result, the appeal of the assessee is dismissed. nounced in the open Court on 30/08/2023. Sd/- Sd/ AMIT SHUKLA) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : Dipen Kumarpal Parekh 9 M.A No. 338/Mum/2023 and ITA No. 1703/M/2022 a case where no response is received within thirty days of the issue of such intimation, such adjustments shall be made: ncorrect claim apparent from the return of income, then the section provides that adjustment has to be made. The Auditor in the audited accounts only points out the date of payment and the due date prescribed under the respective Act (PF and ESI Act) and it is incumbent upon the assessee that, while computing the income he has to disallow the said payment, if it has been made beyond the due date. Thus, in view of the judgment of Hon’ble Apex Court, such claim cannot d therefore, it falls within scope of prima facie adjustment u/s.143(1). Accordingly, we confirm the order of the ld. CIT (A) holding that once the Hon’ble Apex Court has settled the issue, then that is the law which is applicable retrospectively and of payment on account of employees’ contribution to PF & ESI beyond the due dates given in the respective acts as given in 36(1)(va) is incorrect claim which needs to be disallowed / adjusted even within the scope of prima facie dispute u/s.143(1). Therefore, disallowance has rightly been made by CPC, Respectfully following the above, the grounds of appeal of the to PF/ESI amounting result, the appeal of the assessee is dismissed. /08/2023. Sd/- (OM PRAKASH KANT) ACCOUNTANT MEMBER //True Copy// BY ORDER, (Assistant Registrar) ITAT, Mumbai Dipen Kumarpal Parekh 10 M.A No. 338/Mum/2023 and ITA No. 1703/M/2022 BY ORDER, (Assistant Registrar) ITAT, Mumbai