Deduction u/s 36(1)(va) allowed if payment made on day next to due date, as due date being a holiday
Case Law Details
Integrity Verification Vs ITO (ITAT Mumbai)
ITAT Mumbai held that employee’s contribution paid on day next to the due date and due date being a national holiday. Matter remanded back to AO for examining the payments made and allowing the deduction u/s 36(1)(va).
Facts- This appeal filed by the assessee is directed against the order passed by ld. Commissioner of Income-tax (Appeals)-National Faceless Appeal Centre for Assessment Year 2018-19. The appeal was originally heard and pronounced on 28.04.2022, however, later on in view of the decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. vs CIT in ITA No.2833/2016 dated 12.10.2022 has been recalled for deciding the issue of deduction u/s 36(1)(va) of the Act. Accordingly, this appeal came before us for hearing.
Conclusion- We have considered the submissions of the assessee and found that the assessee has paid Rs.1,44,188/- on 16.08.2017 against the due date of the payment i.e. 15.08.2017. The assessee has contended that 15th August being a national holiday, payment has been made on 16.08.2017. In view of the provisions of section 10 of the General clauses Act , 1897, we feel it appropriate to restore the issue back to the file of AO for examining the payments made on day next to due date , being holiday on due date and allow the deduction accordingly. The grounds raised by the assessee are accordingly allowed partly for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal filed by the assessee is directed against the order dated 22.09.2021 passed by ld. Commissioner of Income-tax (Appeals)-National Faceless Appeal Centre (“NFAC”), Delhi [ in short, the “Ld.CIT(A)”] for Assessment Year (“AY”) 2018-19. The appeal was originally heard and pronounced on 28.04.2022, however, later on in view of the decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt.Ltd. vs CIT in ITA No.2833/2016 dated 12.10.2022 has been recalled for deciding the issue of deduction u/s 36(1)(va) of the Act. Accordingly, this appeal came before us for hearing.
2. The grounds raised by the assessee are reproduced as under:-
1. “In the circumstances and facts of our case, the
Learned Commissioner of Income Tax (Appeals), NFAC has erred in law and on facts in disregarding the decisions of jurisdictional courts which is binding upon him.
2. The Appellant crave leave to add, delete or substantiate any grounds of appeal at the time of hearing.”
3. All the grounds raised by the assessee are in relation to the disallowance of employees contribution to PF/ESI deposited after the due date under relevant Acts.
4. We have heard the rival contentions on the issue in dispute and perused the material available on record. Before us, Ld. Counsel for the assessee submitted that allowance of employee’s contribution of PF/ESI paid after due date under the relevant Acts being a debatable issue, the Assessing Officer (“AO”) of the Central Processing Centre (“CPC”) was not justified in adjusting the same under intimation u/s 143(1a) of the Income Tax Act, 1961 (“the Act”). However, this contention of the assessee is not sustainable in view of the fact that Hon’ble Supreme Court has held that “the deduction of employee’s contribution to PF/ESI paid after due date under the relevant Act is not allowable in terms of section 36(1)(va) of the Act and therefore, this falls in the nature of incorrect claim of the assessee. In terms of provision of section 143(1)(a)(ii) of the Act, the AO can make adjustment for any incorrect claim while processing the return of income under theprovision of section 143(1) of the Act. The relevant part of the provision 143(1)(a)(ii) is reproduced as under:-
143 “(1) Where a return has been made under section 139, or in response to a notice under subsection (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 following adjustments, namely:—
(i) ………….
(ii) an incorrect claim, if such incorrect claim is apparent from any information in the return.”
4.1 Since the decision of the Hon’ble Supreme Court operates from the date of introduction of the provisions of section 36(1)(va) of the Act, the issue is no longer debatable and it is liable to be adjusted as an incorrect claim by the assessee. The contentions of the Ld. Counsel for the assessee are accordingly, rejected.
5. Alternatively, the Ld. Counsel for the assessee referred to Paper Book page 73 which contains due date of the payment of PF/ESI as well as actual date of payment. Ld. Counsel for the assessee submitted that on one occasion, the employee’s contribution has been paid on next day of the due date as the due date was being holiday. Therefore, he submitted that in view of the section 10 of the General clauses Act, if the due date of payment falls on holiday, then the payment made on next day of the due date shall be treated as paid on the due date.
6. We have considered the submissions of the assessee and found that the assessee has paid Rs.1,44,188/- on 16.08.2017 against the due date of the payment i.e. 15.08.2017. The assessee has contended that 15th August being a national holiday, payment has been made on 16.08.2017. The section 10 of the General Clauses Act, 1897, reads as under:
Section 10 in The General Clauses Act, 1897 10 Computation of time.
(1) Where, by any 19 [Central Act] or Regulation made after the commencement of this Act, any act or proceeding is directed or allowed to be done or taken in any Court or office on a certain day or within a prescribed period, then, if the Court or office is closed on that day or the last day of the prescribed period, the act or proceeding shall be considered as done or taken in due time if it is done or taken on the next day afterwards on which the Court or office is open: Provided that nothing in this section shall apply to any act or proceeding to which the Indian Limitation Act, 1877 (15 of 1877) 20 , applies.
(2) This section applies also to all 19 [Central Acts] and Regulations made on or after the fourteenth day of January, 1887.
6.1 In view of the provisions of the General clauses Act , 1897,reproduced above, we feel it appropriate to restore the issue back to the file of AO for examining the payments made on day next to due date , being holiday on due date and allow the deduction accordingly. The grounds raised by the assessee are accordingly allowed partly for statistical purposes.
7. In the result, the appeal filed by assessee is allowed partly for statistical purposes.
Order pronounced in the open court on 29.05.2023.
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