Case Law Details
BT Data and Surveying Services India Pvt Ltd Vs ITO (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT) in Delhi has made an important ruling in the case of BT Data and Surveying Services India Pvt Ltd Vs ITO. The judgement centres around the disallowance of belated employee contributions to Provident Fund (PF) and Employees’ State Insurance Corporation (ESIC) under sections 36(i)(va) and 43B of the Income Tax Act, 1961.
Analysis: Despite several opportunities granted for compliance, the assessee failed to appear, leading the ITAT Delhi to proceed ex-parte. The Revenue department argued that the Central Processing Centre (CPC) added Rs.3,13,070/- to the assessee’s returned income due to the late deposit of employee contributions to Provident Fund/ESIC. The department’s actions were backed by a judgement in the case of Checkmate Services (P.) Ltd. vs CIT, which solidified the notion that belated employee contributions are to be considered as taxable income under section 2(24)(x) of the Act, making them ineligible for deduction under section 36(i)(va) in the case of delayed payments.
The verdict also aligned with the perspective of the Pune Bench of the Tribunal in the case of Cemetile Industries vs ITO, asserting that a delay in depositing employee contributions indicated in the Audit Report is sufficient for adjustment under section 143(1) of the Act. This judgement reiterates the point established by the Hon’ble Supreme Court in the Checkmate Services (P.) Ltd. vs CIT case and echoes the stance taken by the Co-ordinate Bench of the Tribunal in Savleen Kaur & Others vs ITO case.
Conclusion: The ruling of the ITAT Delhi in the BT Data and Surveying Services India Pvt Ltd Vs ITO case sets an influential precedent for future cases. The decision reaffirms that delayed employee contributions to Provident Fund/ESIC are to be considered as taxable income, emphasizing the importance of timely compliance. This ruling contributes to the body of jurisprudence surrounding tax liability and compliance, demonstrating the potential consequences for delayed contributions.
FULL TEXT OF THE ORDER OF ITAT DELHI
The captioned appeal has been filed by the assessee against the order of Ld. CIT(A), National Faceless Appeal Centre (“NFAC”), Delhi dated 22.09.2021 arising from intimation dated 16.10.2019 passed u/s 143(1) of the Income Tax Act, 1961 (“the Act”) concerning assessment year 2018-19.
2. As per grounds of appeal, the assessee has challenged the disallowance of employees contribution to Provident Fund/ESIC u/s 36(i)(va) r.w.s. 43B of the Act. When the matter was called for hearing, none appeared for the assessee. It was seen that several opportunities have been given in the past for compliance. However, none appeared on behalf of the assessee. Under these circumstances, we are constraint to proceed ex-parte in the absence of the assessee.
3. Sr.DR for the Revenue on its part, contended that Central Processing Centre (“CPC”) has made additions of Rs.3,13,070/- to the returned income of the assessee on account of late deposit of employees contribution to Provident Fund/ESIC will process the return of income. In this regard, the action of the Revenue in making disallowance towards late deposit of employees contribution to Provident Fund/ESIC was supported by the judgement rendered in the case of Checkmate Services (P.) Ltd. vs CIT (2022) 143taxmann.com178 (SC). Ld. Sr. DR for the Revenue thus submitted that even for Assessment Years prior to Assessment Year 202 1-22, belated employees contribution are to be reckoned as taxable income of the assessee u/s 2(24)(x) of the Act and the deduction u/s 36(i)(va) of the Act would not be permissible thereon in case of belated payments. Ld.Sr.DR for the Revenue further contended that the delayed deposit of employees contribution indicated in the Audit Report is sufficient for adjustment under section 143(1) of the Act, as held by the Pune Bench of the Tribunal in the case of Cemetile Industries vs ITO TS-933-ITAT-2022 (Pune).
4. The issue towards taxability of belated employees contribution to Provident Fund/ESIC is no longer res integra in the light of the judgement of the Hon’ble Supreme Court in the case of Checkmate Services (P.) Ltd. vs CIT (supra). The co-ordinate Bench of the Tribunal in Cemetile Industries vs ITO (supra) had expressed a view that such adjustment/disallowance is also permissible in the proceedings carried out u/s 143(1) of the Act. Very recently, the Co-ordinate Bench of the Tribunal in Savleen Kaur & Others vs ITO in ITA 2249/Del/2022 & Others for Assessment Year 2018-19 & Others vide order dated 09.01.2023 has also taken a similar view and upheld the action of the Revenue. In parity with the view taken by Co-ordinate Benches, we do not see any merit in the appeal of the assessee. We thus, do not see any warrant to any reason to interfere with the order of Ld.CIT(A).
5. In the result, the appeal of the assessee is dismissed ex-parte.
Order pronounced in the open Court on 07th February, 2023.
