Rajasthan High Court
Pr Commissioner Of Income Tax Jaipur-Ii vs Rajasthan Rajya Vidyut Utpadan Nigam ... on 26 September, 2024
Author: Ashutosh Kumar
Bench: Ashutosh Kumar
[2024:RJ-JP:41041-DB]
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
D.B. Income Tax Appeal No. 329/2018
Principal Commissioner of Income Tax Jaipur -II, Jaipur
----Appellant
Versus
Rajasthan Rajya Vidyut Utpadan Nigam Ltd, Vidyut Bhawan,
Janpath, Jaipur
----Respondent
For Appellant : Mr. Anuroop Singhi with
Mr. Aditya Khandelwal
For Respondent : Mr. Prakul Khurana with
Mr. Rajat Sharma
HON'BLE MR. JUSTICE AVNEESH JHINGAN
HON'BLE MR. JUSTICE ASHUTOSH KUMAR
Order
26/09/2024
AVNEESH JHINGAN, J:-
1. This appeal is filed under Section 260A of the Income Tax
Act, 1961 (for short 'the Act') against the order dated 01.06.2018
passed by the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur
(for short 'the Tribunal').
2. The brief facts are that the respondent-company is engaged
in distribution of electricity. The return for assessment year 2009-
10 was filed and the assessment was finalized under Section
143(3) of the Act. The two issues arose in the assessment
proceedings. Firstly, can deduction be allowed if employees' share
of provident fund is deposited beyond the date stipulated in the
Employees' Provident Funds and Miscellaneous Provisions Act,
1952 (for short 'EPF Act') and Employees' State Insurance Act,
[2024:RJ-JP:41041-DB] (2 of 5) [ITA-329/2018]
1948 (for short 'ESI Act'). Secondly, the effect of late deposit of
TDS on claiming deduction of the expenditure.
3. The appeal filed by the respondent was accepted by the
Commissioner of Income Tax (Appeal) and the appeal filed by the
appellant was dismissed by the Tribunal, hence this appeal.
4. The appeal was admitted on 19.05.2023 formulating
following two substantial questions of law:-
"(1) Whether the view taken by the
ITAT that employees' contribution to
Provident Fund and ESI is governed by
the provisions of Section 43B of the
Income Tax Act, 1961 and not by
Section 36(1)(va) read with Section
2(24)(x) of the Income Tax Act, 1961
is sustainable in law in view of the
decision of the Hon'ble Supreme Court
in the case of Checkmate Services P
Ltd Vs. Commissioner of Income Tax-I
(Civil Appeal No.2833 of 2016 decided
on 12.10.2022)?
(2) Whether in the facts and
circumstances of the case, the ITAT
was justified in law in deleting addition
of Rs.4987507/- made for depositing
the employees' contribution to
Provident Fund beyond the prescribed
time limit provided in the respective
Acts?
(3) Whether in the facts and
circumstances of the case the ITAT was
justified in law in deleting the
disallowance of Rs.3581966000/-
made on account of advance against
depreciation deferred without
appreciating that the same is a head
created as an internal arrangement
and does not affect the nature of
receipts as revenue receipts?"
5. Heard learned counsel for the parties.
[2024:RJ-JP:41041-DB] (3 of 5) [ITA-329/2018]
6. The substantial questions No.1 and 2 are covered by the
decision of the Supreme Court in the case of Checkmate
Services Pvt. Ltd. Vs. Commissioner of Income Tax-1
reported as (2022) 448 ITR 518. It was held that share of the
employee in the provident fund deducted by the employer, has to
be deposited as per the due date fixed by the EPF Act and ESI Act
concerned and not as per Section 43B of the Act. There is no
leeway with the assessee in depositing of amount of employees
contribution under EPF Act and ESI Act, beyond the due date as
prescribed by the respective Act. It is only on the deposit in
compliance with the provisions of the EPF Act and ESI Act, the
retained amount is treated for deduction.
The relevant portion of the judgment is quoted below:-
"54. In the opinion of this Court, the
reasoning in the impugned judgment
that the non-obstante clause would not
in any manner dilute or override the
employer's obligation to deposit the
amounts retained by it or deducted by it
from the employee's income, unless the
condition that it is deposited on or before
the due date, is correct and justified. The
non-obstante clause has to be
understood in the context of the entire
provision of Section 43B which is to
ensure timely payment before the
returns are filed, of certain liabilities
which are to be borne by the assessee in
the form of tax, interest payment and
other statutory liability. In the case of
these liabilities, what constitutes the due
date is defined by the statute.
Nevertheless, the assessees are given
some leeway in that as long as deposits
are made beyond the due date, but
before the date of filing the return, the
deduction is allowed. That, however,
cannot apply in the case of amounts
[2024:RJ-JP:41041-DB] (4 of 5) [ITA-329/2018]
which are held in trust, as it is in the
case of employees' contributions- which
are deducted from their income. They
are not part of the assessee employer's
income, nor are they heads of deduction
per se in the form of statutory pay out.
They are others' income, monies, only
deemed to be income, with the object of
ensuring that they are paid within the
due date specified in the particular law.
They have to be deposited in terms of
such welfare enactments. It is upon
deposit, in terms of those enactments
and on or before the due dates
mandated by such concerned law, that
the amount which is otherwise retained,
and deemed an income, is treated as a
deduction. Thus, it is an essential
condition for the deduction that such
amounts are deposited on or before the
due date. If such interpretation were to
be adopted, the non-obstante clause
under Section 43B or anything contained
in that provision would not absolve the
assessee from its liability to deposit the
employee's contribution on or before the
due date as condition for deduction."
7. In view of the decision of the Supreme Court in the case of
Checkmate (supra) the substantial questions No.1 and 2 are
answered in favour of the appellant-Department.
8. With regard to substantial question No.3, learned counsel for
the respondent submits that the question is covered by the
decision of the High Court of Punjab and Haryana in the case of
Commissioner of Income Tax, Faridabad Vs. NHPC Ltd.
reported as 2018:PHHC:016385-DB wherein the Division Bench
relying upon the decision of the Supreme Court in the case of
National Hydro Electric Power Corporation Ltd. Vs.
Commissioner of Income Tax reported as (2010) 320 ITR
[2024:RJ-JP:41041-DB] (5 of 5) [ITA-329/2018]
374. It is further argued that the Department has accepted this
decision.
9. It was held that Advance Against Depreciation was not
income received for the relevant accounting year and cannot be
carried forward through the Profit and Loss account. The question
was answered in favour of the assessee.
10. Learned counsel for the appellant-Department is not in a
position to distinguish the decision relied upon and to refute the
fact that the decision of Punjab & Haryana High Court was
accepted by the department. The substantial question No.3 is
answered against the appellant-Department.
11. The appeal is accordingly disposed of.
(ASHUTOSH KUMAR),J (AVNEESH JHINGAN),J
AARZOO ARORA /Riya/138 S.
Whether Reportable : Yes
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