DCIT Vs B. L. Kashyap & Sons Ltd. (ITAT Delhi)
The Revenue’s appeal and the assessee’s cross-objection arose from the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2019-20 concerning the deletion of disallowance of Rs. 2,63,96,393 relating to employees’ contributions to PF and ESI. The Revenue challenged the deletion, contending that the contributions had been deposited beyond the due dates prescribed under the respective statutes and that the issue was covered by the Supreme Court’s decision in Checkmate Services Pvt. Ltd. v. Commissioner of Income Tax-1. The assessee, through its cross-objection, challenged the adjustment made while processing the return under Section 143(1), contending that the addition was beyond the scope of such processing and that the contributions, though deposited after the statutory due dates, had been deposited before the due date for filing the return under Section 139(1).
The assessee further submitted that the adjustment under Section 143(1) was not permissible as the issue was debatable. Alternatively, it contended that the expenditure was allowable under Section 37(1). The assessee also argued that in its construction business, salaries were often disbursed only after receipt of payments from clients. Accordingly, it was submitted that the due date for depositing employees’ PF and ESI contributions should be computed with reference to the month in which salaries were actually disbursed rather than the month in which the salary liability accrued. It was contended that if this methodology were adopted, the alleged delay would substantially reduce.
