SUNRISE FACILITATORS PRIVATE LIMITED,CHANDIGARH V. DY. COMMISSIONER OF INCOME TAX, PANCHKULA

ITA 689/CHANDI/2023

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The case involves M/s Sunrise Facilitators Pvt. Ltd., the appellant, contesting an order from the Commissioner of Income Tax (Appeals), which upheld an intimation by the Centralized Processing Center disallowing late payment deductions for Employees' Contributions to PF/ESI amounting to Rs.161.54 Lacs for the Assessment Year 2019-20. The primary legal issue was the interpretation of Section 36(1)(va) read with Section 2(24)(x) of the Income Tax Act, particularly after the Finance Act, 2021 amendment. The tribunal referenced the Supreme Court's decision in Checkmate Services P. Ltd Vs. CIT, which clarified the distinction between the employer's contribution and the employee's contribution, the latter being deemed income and subject to specific conditions for deduction.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 716688 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2019-2020
• Appeal Filed On: 10-11-2023
• Other Referred Cases: Checkmate Services P. Ltd Vs. CIT (2022) 143 Taxmann.com 178(SC)
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA DHAR LD.
• Assessee Lawyers: PARIKSHIT AGGARWAL LD

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, CHANDIGARH PHYSICAL HEARING BEFORE HON’BLE SHRI LALIET KUMAR, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA No.689/CHANDI/2023 (िनधाŊरण वषŊ / Assessment Year: 2019-20) M/s Sunrise Facilitators Pvt. Ltd. 2238/5B, Shanti Nagar Manimajra, Chandigarh. बनाम/ Vs. DCIT Circle Aaykar Bhawan, Sector 2, Panchkula ̾थायीलेखासं./जीआइआरसं./PAN/GIR No. AAICS-0850-M (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) अपीलाथŎकीओरसे/ Appellant by : Shri Parikshit Aggarwal (CA) – Ld. AR ŮȑथŎकीओरसे/Respondent by : Smt. Priyanka Dhar (Addl. CIT) – Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 06-08-2025 घोषणाकीतारीख /Date of Pronouncement : 18-08-2025. आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2019-20 arises out of an order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 18-08-2022 in the matter of an intimation issued by CPC u/s 143(1) on 15-09-2020 disallowing late payment of Employees’ Contribution to PF / ESI for Rs.161.54 Lacs u/s 36(1)(va) r.w.s. 2(24)(x) as reported by Tax Auditor in Tax Audit Report. The Ld. CIT(A) Printed from counselvise.com 2 confirmed the same in terms of clarificatory amendment made by Finance Act, 2021 to these provisions. Aggrieved, the assessee is in further appeal before us. 2. It is undisputed fact that the impugned issue stood covered against the assessee by the decision of Hon’ble Apex Court in the case of Checkmate Services P. Ltd Vs. CIT (2022) 143 Taxmann.com 178(SC) wherein it has finally been held that there is clear distinction between 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 from its employees’ [in terms of Sec. 36(1)(va)]. 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) and therefore, subjected to conditions spelt out by Explanation to Section 36(1)(va) 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 contributions – the employer’s liability is to be paid out of its income whereas the second is deemed to be 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. If the same is not deposited as per mandate of Sec .36(1)(va), the deduction of the same would not be available to the assessee. Thus, this issue has been decided in favor of the revenue. Printed from counselvise.com 3 3. The Ld. AR has urged that the assessee has suffered higher disallowance due to wrong reporting of respective payment dates by Tax Auditor. In support, tabular charts have been placed before us separately identifying payments which have been made within time and payments which have been deposited beyond due date. The Ld. AR stated that payments of Rs.58,58,015/- have been deposited beyond due dates whereas remaining payments are within time. The copies of the challans have also been placed on record. The same being factual aspect, we direct Ld. AO to verify the same and restrict the disallowance only to the extent of late payment only. No other ground has been urged in the appeal. 4. The appeal stand party allowed for statistical purposes. Order pronounced on 18-08-2025. Sd/- Sd/- (LALIET KUMAR) (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 18-08-2025. आदेश की Ůितिलिप अŤेिषत /Copy of the Order forwarded to : 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकरआयुƅ/CIT 4. िवभागीयŮितिनिध/DR 5. गाडŊफाईल/GF ASSISTANT REGISTRAR ITAT CHANDIGARH Printed from counselvise.com "