POONAM SABHARWAL,DELHI V. ITO WARD-28(5), DELHI

ITA 1183/DEL/2025

AI Insights

The case involves appeals by the assessee, Poonam Sabharwal, against the orders of the Commissioner of Income Tax (Appeals)/NFAC, which sustained disallowances made under Section 36(1)(va) read with Section 43B of the Income Tax Act, 1961, concerning employee's contributions to PF/ESI. The ITAT examined whether such disallowances were permissible while processing returns under Section 143(1) of the Act, particularly in light of varying judicial interpretations prior to the Supreme Court's definitive ruling in Checkmate Services Pvt. Ltd. The Tribunal found that for A.Y. 2017-18, the disallowance was not justified as the issue was debatable and there were binding decisions in favor of the assessee by the jurisdictional High Court at the time the intimation under Section 143(1) was passed. However, for A.Y. 2021-22, since the intimation was passed after the Supreme Court's decision, the legal position changed, and the disallowance was upheld.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 788841 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: misc
• Appeal Filed On: 27-02-2025
• Other Referred Cases: A2Z Infra Services Limited Vs. DCIT, Checkmate Services Private Limited Vs. CIT, Raj Kumar Bothra v. Dy. CIT, Sentinel Consultants Pvt. Ltd. Vs. ACIT, Kanoi Paper and Industries Ltd. vs. ACIT, B. L. Kashyap & Sons Ltd., VVDN Technologies Pvt. Ltd., M/s. BPS Infrastructure v. ITO. Ward- 1(3). Raipur, Kvaverner John Brown Engg. (India) Pvt. Ltd. v. Assistant Commissioner of Income Tax, Assistant Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers Pvt. Ltd., Satpal Singh Sandhu v. DCITS, Parv Buildcon v. DCIT, Pr.CIT vs. Khyati Realtors (P) Ltd., Checkmate Services Pvt. Ltd. (supra), State of Bihar and Ors v. Ramesh Prasad Verma (Dead) through LR, EV George and Ors v. State of Kerala and Ors, Central Bureau of Investigation v. R.R. Kishore
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANKUSH KALRA
• Assessee Lawyers: SUNIL AGARWAL
• Keywords: Set aside; Opportunity of being heard; Retrospective amendment; Question of law; Capital expenditure
• Section: 43B; 37(1)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, ‘E’: NEW DELHI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER & SHRI NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No.1183 & 1182/Del/2025 [Assessment Year: 2017-18 & 2021-22] Poonam Sabharwal 68, 1st Floor, Poorvi Marg, Vasant Vihar-1, New Delhi PAN No.AWLPS2760A Vs. ITO Ward -28 (5) New Delhi Appellant Respondent Assessee by Sh. Sunil Agarwal, CA Revenue by Ms. Ankush Kalra, Sr. DR Date of Hearing 13.11.2025 Date of Pronouncement 28.11.2025 ORDER PER C.N. PRASAD, JM, These appeals are filed by the assessee against different orders of the learned Commissioner of Income Tax (Appeals)/ NFAC [hereinafter referred as “CIT(A)”] dated 07.01.2025 for A.Y. 2017-18 and A.Y. 2021-22 in sustaining the disallowance made under Section 36(1)(va) read with section 43B in respect of employee’s contribution to PF/ ESI while processing the return of income under Section 143 (1) of the IT Act 1961. Printed from counselvise.com Page | 2 2. Heard rival submissions and perused the orders of the authorities below. In so far as the A.Y. 2017-18 is concerned we observed that the intimation under Section 143 (1) was passed on 21.03.2019 and while passing the intimation the AO/CPC made disallowance in respect of employees contribution to PF/ESI. 3. We observed that the issue as to whether there can be any disallowance under Section 36(1)(va) read with section 43B of the Act in respect of employee’s contribution to PF/ ESI while processing the return under Section 143 (1) came up for consideration before the coordinate Bench of the ITAT Delhi in the case of A2Z Infra Services Limited Vs. DCIT reported in 176 taxmann.com 639 and the coordinate Bench held that while passing intimation under Section 143(1) prior to the decision of the Hon’ble Supreme Court in the case of Checkmate Services Private Limited (order dated 12.10.2022) there were binding decisions of the jurisdictional Hon’ble High Court and, therefore, the AO/ CPC could not have made any disallowance under Section 36(1)(va) r.w.s. 43B of the Act observing as under :- 2. The Ld. Counsel for the assessee, at the outset, referring to ground no.3 of grounds of appeal for the AY 2017-18 and ground no.2 of grounds of appeal for the AY 2019-20 submitted that the disallowance u/s 36(1) (va) in respect of employees contribution to PF & ESI cannot be subject matter of disallowance while processing the return u/s 143(1) of the Act. The Ld. Counsel for the assessee submitted that as on the date Printed from counselvise.com Page | 3 of passing of intimation u/s 143(1) of the Act dated 28.03.2019 and 07.07.2020 for the assessment years 2017-18 and 2019-20 respectively the issue of disallowance of PF/ESI contributions of employees was debatable there were divergent views of various High courts and as a matter of fact the Jurisdictional High Court which is Punjab & Haryana was in favour of the assessee, the Hon'ble High Court took a view that no disallowance u/s 36(1)(va) r.w.s. 438 of the Act is permissible even though the contributions were made beyond the due dates specified in the respective Acts but remitted before the due date of filing the return. The Ld. Counsel for the assessee therefore submits that as on the date of passing the intimation u/s 143(1) the issue was highly debatable and it was subject matter of decision before the Hon'ble Supreme Court in the case of Checkmate Services (P.) Ltd. v. CIT [2022] 143 taxmann.com 178/448 ITR 518/[2023] 290 Tasman 19 (SC) which decision was rendered only on 12.10.2022 and till that time the issue was debatable and therefore the disallowance of PF & ESI contributions while passing the intimation u/s 143(1) could not have been done. 3. Ld. Counsel for the assessee placed reliance on the recent decision of the Hon'ble Chattisgarh High Court at Bilaspur in Raj Kumar Bothra v. Dy. CIT [2025] 174 taxmann.com 1199/476 ITR 249 (Chhattisgarh)/TAXC No.56/2025 dated 08.05.2025. Referring to this decision the Ld. Counsel for the assessee submitted that on identical facts the Hon'ble High Court set aside Printed from counselvise.com Page | 4 the intimation passed u/s 143(1)(a), wherein disallowance of contribution towards PF & ESI u/s 36(1)(va) r.w.s. 2(24)(x) of the Act was deleted for the reason that as on the date of passing of intimation u/s 143(1)(0) of the Act in that case was 16.12.2021 the issue of said disallowance was highly debatable till the decision of the Hon'ble Supreme Court in the case of Checkmate Services (P.) Ltd. (supra), which was delivered on 12.10.2022. The Ld. Counsel for the assessee submitted that in the case on hand the intimations u/s 143(1) were passed on 28.03.2019 and 07.07.2020 for the assessment years 2017-18 and 2019-20 respectively by the CPC disallowing employees contribution towards PF & ESI and whereas the decision in the case of Checkmate Services was rendered much later on 12.10.2022 and therefore the decision of the Hon'ble Chattisgarh High Court in the case of Raj Kumar Bothra (supra) is squarely applicable to the facts of the assessee's case. 4. On the other hand, the Ld. DR strongly supported the orders of the authorities below and placed reliance on the decision of the Hon'ble Supreme Court in the case of Checkmate Services (P.) Ltd. (supra). 5. Heard rival submissions, perused the orders of the authorities below. The only issue in respect of ground nos. 3 & 2 for the assessment years 2017-18 and 2018- 19 respectively is as to whether the disallowance u/s 36(1)(va) r.w.s. 2(24)(x) of the LT. Act in respect of Printed from counselvise.com Page | 5 employees contribution to PF and ESI is permissible while processing the return u/s 143(1) of the Act prior to the decision of the Hon'ble Supreme Court in the case of Checkmate Services (P.) Ltd. (supro) which was rendered on 12.10.2022. In the case on hand the Intimations u/s 143(1) were passed for the assessment years 2017-18 and 2019-20 on 28.03.2019 and 07.07.2020 respectively making disallowance u/s 36(1)(va) in respect of employees contribution to PF & ESI and as on the date of passing the said intimations the decision of the Hon'ble Supreme Court in the case of Checkmate Services (P.) Ltd. (supra) was not available. The issue of disallowance of employee contribution to PF & ESI was also highly debatable and there were divergent views from various High Courts and Tribunal. We observed that the jurisdictional High Court in the case of CIT v. Hemla Embroidery Mills (P) Ltd. [2013] 37 taxmann.com 160/217 Taxman 207/366 ITR 167 (Punjab & Haryana) held that employee's contribution to PF & ESI deposited prior to due date for filing return of income but beyond the due dates specified in the PF & ESI Act, would be deductible. So when the intimations u/s 143(1) were passed for AY 2017-18 and 2019 20 there was a binding decision of the Jurisdictional High Court in favour of the Assessee and by virtue of this binding decision the AO could not have made disallowance of employee's contribution to PF & ESI though paid beyond the due dates specified in respective Acts but before the due date for filing the return of income while processing the returns u/s 143(1) of the Act. Printed from counselvise.com Page | 6 6. We further observed that on identical circumstances, the Hon'ble Chattisgarh High Court recently by order dt. 08.05.2025 in the case of Raj Kumar Bothra (supra) had set aside the intimation passed u/s 143(1)(0) dated 16.12.2021 wherein disallowance was made u/s 36(1)(va) read with 2(24)(x) of the Act which intimation was passed prior to the decision of the Hon'ble Supreme Court in the case of Checkmate Services (P.) Ltd. (supra) delivered on 12.10.2022 observing as under: - \"3. The appellant/assessee filed the return of income for Assessment Year 2020-21 declaring a total Income of Rs.3,76,34,910/- and paid tax to the tune of Rs.1,44,33,865 The return of the assessee was processed by Central Processing Centre (CPC), Bengaluru/Assessing Officer and an intimation order was issued exercising the powers under Section 143(1)(a) of the Act of 1961, wherein, claim for deduction of delayed deposit of employees' share of contribution towards Employees' State Insurance (ESI) and Employees Provident Fund (EPF) of Rs. 28,21,065/- under Section 36(1)(va) of the Act of 1961 was disallowed by the order dated 16.12.2021. Feeling aggrieved by the said order, the assessee preferred an appeal under Section 246A of the Act of 1961 before the Commissioner of Income Tax (Appeals) (for short short \"the CIT(Appeals)\") by submitting Form No.35 and challenging the aforesaid intimation sider the meanwhile, 12.10.202 Fort Checkmate Services Private Printed from counselvise.com Page | 7 Limited v. Commissioner of Income Tax-11 judgment was delivered by the Supreme Court, settling the issue with reductich under deduction under Section 36(1)(va) of the Act of 1961, wherein, it was held that to claim deduction under the aforesaid provision, employees' contribution should be deposited on or before the due dates specified under the respective employees welfare Acts. Ultimately, the CIT (Appeals) passed the order on 15.07.2024 dismissing the appeal of the assessee, against which, the assessee preferred an appe the Income Tax Appellate Tribunal (HAT), which was dismissed by the impugned order dated 26.09.2024 leading to filing of the present appeal, in which, the above-stated substantial question of law has been formulated for consideration. 4. Mr. Nikhilesh Begani, learned counsel appearing for the appellant/assessee submits that though the Assessing Officer has processed the return of the income of assessee, however, on the date when the intimation order was issued exercising powers under Section 143(1)(a) of the Act 1961, the issue with regard to claim of deduction under Section 36(1)(va) of the Act of 1961 Le. as to whether the employees' contribution should be deposited on or before the due dates in terms of Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (for short \"EPF Act 1952\") and Employees' State Insurance Printed from counselvise.com Page | 8 Act, 1948 (for short \"ESI Act 1948\"), was pending consideration before the Supreme Court in Checkmate Services Pvt Ltd (supra) and only on 12.10.2022, the issue with regard to claim of deduction under Section 36(1)(va) of the Act of 1961 was settled holding that employees' contribution should be deposited on or before the due dates specified under the respective employees welfare Acts. Therefore, on the date of passing the intimation order, the issue with regard to deposit of contribution on or before the due date under Section 36(1)(va) of the Act of 1961, was highly debatable and contentious. Learned counsel further submits that the scope and ambit of Section 143(1)(a) of the Act of 1961 only permits prima facie adjustments to be carried out and the highly debatable issues cannot be adjusted/disallowed while processing return under Section 143(1)(a) of the Act 1961. In support of the contention, learned counsel would rely upon the decisions rendered by the Supreme Court in the matter of Kvaverner John Brown Engg. (India) Pvt. Ltd. v. Assistant Commissioner of Income Tax2 and in the matter of Assistant Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers Pvt. Ltd.3 He further submits that since on the relevant date of passing of intimation order, the issue being highly dehatable, the Assessing Officer ought not to have resorted to the provision under Section 143(1)(0) of the Act of 1961, which was completely unsustainable and bad in law and the same was neither considered Printed from counselvise.com Page | 9 by the CIT (Appeals) nor the ITAT. He would also submit that the reliance placed by the ITAT in the matter of M/s. BPS Infrastructure v. ITO. Ward- 1(3). Raipur4 would not be applicable, as in that case, this Court has considered the issue of delay in filing the appeal and dismissed the same as barred by limitation by holding that no sufficient cause has been shown in filing the appeal and further the substantial question of law formulated in this tax appeal was neither involved nor considered at all in that appeal. As such, the ITAF committed a grave legal error in applying the decision of M/s. BPS Infrastructure (supro) while passing the impugned order. He would finally submit that the ITAT in Satpal Singh Sandhu v. DCITS and Parv Buildcon v. DCIT 6 had already held that claim of deduction in respect of delayed deposit in respect of employees' share of contribution towards ESI and EPF could not be summarily disallowed by Assessing Officer under the provisions contained in Section 143(1)(0) of the Act of 1961 and negated disallowance of delayed deposit of employees' share of contribution towards ESI and EPF holding that the decision of the Supreme Court in Checkmate Services (P.) Ltd. v. CIT [2022] 143 taxmann.com 178/448 ITR 518/[2023] 290 Taxman 19 (SC)/ Checkmate Services Pvt. Ltd. (supra) was not available at the time when the intimation under Section 143(1)(a) of the Act of 1961 was issued in this case on 16.12.2021 and against the aforesaid orders of the ITAT, tax appeals vide Printed from counselvise.com Page | 10 TAXC No.149/2024 (The Deputy Commissioner of Inconie Tax v. Parv Builcon) and TAXC No. 158/2024 (The Deputy Commissioner of Income Tax v. Satpal Singh Sandhu) respectively were preferred before this Court by the Revenue, however, both the appeals were withdrawn by the Revenue and as such, the Revenue cannot be allowed to take a different stand in different forums. Learned counsel for the appellant/assessee finally submits that the intimation order under Section 143(1)(a) of the Act of 1961, the order passed by CIT (Appeals) and the order passed by the ITAT, affirming the order of CIT (Appeals), deserve to be set-aside by granting this appeal. 5. Mr. Ajay Kumrani, learned counsel for the respondent would support the impugned order and submit that the contention of the appellant that the subject adjustment/ disallowance is beyond the power of Assessing Officer in View of Section 143(1)(a) of the Act of 1961 is not correct: The adjustment made towards delayed deposit of employee’s contribution is very much within the powers of Assessing officer to prima facle make adjustment at the time of processing of return. He further submits that in view of the decision of the Supreme Court in the matter of Checkmate Services (P) Ltd. v. CIT (2022] 143 taxmann.com 178/448 ITR 518/12023] 290 Taxman 19 (SCV Checkmate Services Pvt. Ltd. (supra), the issue is now well settled. He further submits that in the Printed from counselvise.com Page | 11 present case, it is an admitted position that the due date. He would also submit that the clarificatory judgment of the Supreme Court in Checkmate appellant/assessee has deposited the employees' contribution under the heads of ESI and EPF after the Services Pvt Ltd (supra) would have the retrospective effect as held in the decisions rendered by the Supreme Court in the matters of State of Bihar and Ors v. Ramesh Prasad Verma (Dead) through LR7. EV George and Ors v. State of Kerala and Ors and also Central Bureau of Investigation v. R.R. Kishore\". He finally submits that the judgments upon which learned counsel for the appellant has placed reliance are clearly distinguishable to the facts of the present case, therefore, they are of no help to the appellant. In view of such submission, leaned counsel for the respondent prays that this appeal be dismissed. 6. We have heard learned counsel for the parties and considered their rival submissions and also went through the record with utmost circumspection. 7. Admittedly, return of the income filed by the appellant/assessee was processed by the Assessing Officer and an intimation order dated 16.12.2021 was issued exercising power under Section 143(1)(a) Act of 1961, wherein, claims for deduction of delayed deposit of employees' share Printed from counselvise.com Page | 12 of contribution towards Employees State Insurance and Provident Fund of Rs.28,21,065/- under Section 36 (1)(va) of the Act of 1961 were disallowed, inasmuch as, on the said date, the issue with regard to delayed deposit of contribution with respect to interpretation under Section 36(1)(va) of the Act of 1961 and whether the assessee is entitled to deduction of amount deposited by them, which was contribution in terms of the EPF Act, 1952 and the ESI Act, 1948 on or before the due date was pending consideration before the Supreme Court in the matter of Checkmate Services (P.) Ltd. v. CIT [2022] 143 taxmann.com 178/448 ITR 518/[2023] 290 Taxman 19 (SC)/ Checkmate Services Pvt. Ltd. (supra). In the said judgment, their Lordships of the Supreme Court noticed a division of opinion on the issue of interpretation under Section 36(1)(va) of the Act of 1961, with the High Courts of Bombay, Himachal Pradesh, Calcutta, Guwahati and Delhi favouring the interpretation beneficial to the assessees on the one hand, and the High Courts of Kerala and Gujarat preferring the interpretation in favour of the Revenue on the other hand. Ultimately, their Lordships resolved the issue authoritatively by holding that to claim deduction under Section 36(1) (va) of the Act of 1961, the employees' contribution should be deposited on or before the due dates specified under the respective Employee Welfare Act. Their Lordships of the Printed from counselvise.com Page | 13 Supreme Court settled the issue by making the following observation: - \"62. 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 by Explanation to Section 36(1)(va) are satisfied le., 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. 63. 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 Printed from counselvise.com Page | 14 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 Printed from counselvise.com Page | 15 assessee from its liability to deposit the employee's contribution on or before the due date as a condition for deduction.” 3. In the case on hand the intimation was processed under Section 143 (1) on 21.03.2019 which is prior to the decision of Hon’ble High Court in the case of Check Mate Services Private Limited Vs. CIT (order dated 12.10.2022), therefore, following the decision of the coordinate Bench we hold that there cannot be any disallowance in respect of employee’s contribution towards PF/ESI while processing the return under Section 143 (1) of the Act. Thus, we direct the AO to delete the disallowance made in respect of employee’s contribution to PF/ESI for the A.Y. 2017-18 in the intimation processed under Section 143(1) of the Act. 4. Coming to appeal for A.Y. 2021-22 we observed that the intimation under Section 143(1) was passed after decision of Hon’ble Supreme Court in the case of Checkmate Services Private Limited order dated 12.10.2022 and, therefore, the ratio of the decision of the Hon’ble Supreme Court in the case of Checkmate Services Private Limited will apply for A.Y. 2021- 22. We also observed that a similar issue came up for consideration before the Tribunal in assesee’s own case for the A.Y. 2018-19 and the Tribunal vide order dated 20.12.2024 in ITA No.88/Del/2024 sustained the disallowance on following the decision of the Hon’ble Supreme court in the case of Checkmate Services Private Limited. However, the Tribunal on Printed from counselvise.com Page | 16 the alternate plea of the assessee restored the issue to the file of the AO by observing as under :- 8. Considered the rival submissions and material placed on record. With regard to ground nos. 2 to 4 regarding delay in payment of employees contribution towards EPF & ESIC beyond the due dates u/s. 36(1)(v)(a) of the Act, we observed that the issue under consideration is against the assessee on the basis of decision of Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. (2022) 143 taxman..com 178. 8.1 Coming to alternative plea of the assessee. Considered the rival submissions and this plea was considered by the coordinate Bench in the case of M/s Benson Movers Pvt. Ltd in ITA No. 2710/Del/2022 for AY 2019-20 and the relevant decision of the coordinate Bench is as under :- “5. In so far as employees contributions towards PF & ESI it is noticed that the issue as to whether the due date under PF/ESI Acts should be as per the calendar month for which the salary is payable or from the month in which the salary is paid to the employee by the employer came up for adjudication in the case of Sentinel Consultants Pvt. Ltd. Vs. ACIT (supra) and the Tribunal restored the issue to the file of the AO with the following observations: 9. We have carefully considered the rival submissions and perused the material available on record. The disallowance of employees' contribution to PF/ESIC for breach of condition under Section 36(1)(va) is in controversy. 9.1 We notice at the outset that an opportunity was given via electronic platform of the deptt. For the proposed adjustments and in the absence of e-response, the adjustments were carried out the CPC-Bangluru and intimation was issued enhancing the assessed income in the captioned assessment years. The CIT(A) in the first appeal has sustained the adjustments towards belated deposits of employees' contribution to PF/ESIC in the light of the Printed from counselvise.com Page | 17 judgment rendered by the Hon'ble Supreme Court in Checkmate Pvi. Lid. vs. CIT (2022) 143 taxmann.com 178 (SC). The contention of the Assessee that such additions cannot be made under the umbrella of S. 143(1) is covered against the assessee the decision of the co-ordinate bench in the case of Weather Comfort Engineers Private Limited vs. ACIT- CPC ITA No. 959/Del/2021 order dated 15/02/2023. The action of CPC and CIT(A) thus cannot be faulted where some opportunity was admittedly given for e- response. 9.2 We now turn to alternate plea on behalf of the assessee for grant of deduction under general provisions for deduction of expenditure under S. 37 of the Act. We do not see any merit in such plea that the belated deposit of employees contributions to PF/ESIC governed under Section 36(1) (va) is also simultaneously amenable to deduction under Section 37(1) of the Act. In terms of the provision, Section 37(1) permits deduction of expenditure which is not in the nature of expenditure prescribed in Sections 30 to 36 of the Act and also not being in the nature of capital expenditure or personal expenses of the assessee. Thus, in view of such mandate of law, the deduction of expenditure under the general clause of Section 37(1) would not extend to expenditure specially covered within the ambit of Section 36(1)(va) of the Act. The Hon'ble Supreme Court in the case of Checkmate Pvt. Ltd. (supra) itself explains this position in Para 32 of the Judgment. Such view also draws support from the observations made in recent judgment of the Hon'ble Supreme Court in the case of Pr.CIT vs. Khyati Realtors (P) Ltd. (2022) 141 taxmann.com 461 (SC). The alternate plea is thus without any merit. 9.3 We also take note of yet another plea made out on behalf the assessee towards methodology of calculation of default under the relevant PF/ESIC Act. The Ld. Counsel contends that the month during which the disbursement of salary is actually made Printed from counselvise.com Page | 18 would be relevant for the purposes of determination of due date of deposit under the respective statute. The accrual of liability towards payment of salary without actual disbursement would not fasten obligation for deposits of employees contribution in the labour Acts per se. as observed by the co- ordinate bench in Kanoi Paper and Industries Ltd. vs. ACIT (2002) 75 ITJ 448 (Cal.) This aspect has not been found to be examined by the Assessing Officer or CIT(A). Hence without expressing any opinion on merits on this aspect, we deem it expedient to restore the matter to the file of designated AO. It shall open to the assessee to place factual matrix before the Ao and take such plea or evaluation of the AO. The AO shall examine this aspect and fresh order in accordance with law after giving proper opportunity. 6. We find similar view has been taken by the co-ordinate benches in the cases of B. L. Kashyap & Sons Lid. (supra) and VVDN Technologies Pvt. Ltd. (supra). The Id. Counsel submits that in view of these decisions the matter may be restored to the Assessing Officer to ascertain the due date for remittance of the PF/ESI contributions of employees. Considering the decisions of the coordinate benches referred to above we restore this issue to the file of the Assessing Officer to decide in the light of the observations made by the Tribunal in the case of Kanoi Paper & Industries Ltd. Vs. ACIT (supra). Needless to say that the Assessing Officer shall provide adequate opportunity of being heard to the assessee and the assessee is at liberty to provide all the necessary information in support of its contention.\" 9. Since the above issue is squarely covered by the above decision, we are inclined to remit the issue back to the file of AO to consider the alternative plea of the assessee as per law after giving proper opportunity of being heard to the assessee. Printed from counselvise.com Page | 19 5. We also find that the coordinate Bench of ITAT Delhi in the case of Sentinel Consultants Pvt. Ltd. Vs. ACIT in ITA No. 7 & 8 of 2023 by order dated 12.06.2023 held as under :- “9.3 We also take note of yet another plea made out on behalf the assessee towards methodology of calculation of default under the relevant PF/ESIC Act. The Ld. Counsel contends that the month during which the disbursement of salary is actually made would be relevant for the purposes of determination of due date of deposit under the respective statute. The accrual of liability towards payment of salary without actual disbursement would not fasten obligation for deposits of employees contribution in the labour Acts per se. as observed by the co-ordinate bench in Kanoi Paper and Industries Ltd. vs. ACIT (2002) 75 TTJ 448 (Cal). This aspect has not been found to be examined by the Assessing Officer or CIT(A). Hence without expressing any opinion on merits on this aspect, we deem it expedient to restore the matter to the file of designated AO. It shall be open to the assessee to place factual matrix before the AO and take such plea for evaluation of the AO. The AO shall examine this aspect and fresh order in accordance with law after giving proper opportunity.” 6. Respectfully following the above decisions we restore the issue to the file of the AO to consider the alternate plea as in the light of the decision by the coordinate Bench in assessee’s own case for A.Y. 2018-19 rendered in para 8.1 and 9 of the order. 7. In the result, the appeal of the assessee for A.Y. 2017-18 is allowed and appeal for A.Y. 2021-22 is partly allowed for statistical purposes. Printed from counselvise.com Page | 20 Order pronounced in the open court on 28.11.2025 Sd/-/- Sd/- [NAVEEN CHANDRA] [C.N. PRASAD] ACCOUTNANT MEMBER JUDICIAL MEMBER Dated:28.11.2025 NEHA , Sr.P.S.* Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi Printed from counselvise.com "