Case Law Details
Aroma Aromatics and Flavours Vs CIT(A) (ITAT Delhi)
Conclusion: Disallowance under section 36(1)(va) on account to late deposit of employees contribution of provident fund was justified as employees’ contribution retained its character as income by virtue of section 2(24)(x) unless the conditions spelt by Explanation to section 36(1)(va) were satisfied i.e. depositing such amount received or deducted from the employee on or before the due date.
Held: Assessee had filed his return of income declaring the income of Rs.1,25,46,392/-. The return was processed by CPCP at Rs.1,25,84,043/- vide intimation u/s 143 (1) by making an addition of Rs.37,651/- under section 36(1)(va) on account to late deposit of employees contribution of provident fund. Assessee filed an application under section 154 to reprocess the return of income, but CPC had rejected the rectification application vide order under section 154. It was held that the employees’ contribution retained its character as income (albeit deemed) by virtue of section 2(24)(x) unless the conditions spelt by Explanation to section 36(1)(va) were satisfied i.e. depositing such amount received or deducted from the employee on or before the due date. Employer’s liability was to be paid out of its income whereas the second was deemed an income, by definition, since it was the deduction form the employees’ income and held in trust by the employer. Hence, the above adjustment as done by the CPC under section 143(1)(iv) and had now the sanction of Hon’ble Apex Court in the case of Checkmate Services Pvt. Ltd.. Assessee’s thrust that the issue was debatable was not at all sustainable inasmuch as it was not relevant as per the extant provision of law contained in section 143 (1). Moreover, the Hon’ble Supreme Court decision was law of the land and clarified the matter from the very beginning itself. In this view of the matter, there was no infirmity in the order of ld. CIT (A).
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi dated 27.08.2021 for the Assessment Year 2018-19.
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