Pr. Commissioner Of Income Tax, Jaipur-Ii, Jaipur v. M/S Jaipur Vidyut Vitran Nigam Limited, Vidyut Bhawan, Janpath, Jaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 63/2021 Pr. Commissioner Of Income Tax, Jaipur-Ii, Jaipur. ----Appellant Versus M/s Jaipur Vidyut Vitran Nigam Limited, Vidyut Bhawan, JanPath, Jaipur. ----Respondent For Appellant(s) : Mr. Anuroop Singhi with Mr. Aditya Khandelwal Mr. N.S. Bhati For Respondent(s): Mr. K.N. Sharma HON'BLE MR. JUSTICE INDERJEET SINGH HON'BLE MR. JUSTICE VINOD KUMAR BHARWANIOrder 07/01/2025 Learned counsel for the appellant submits that the issueinvolved in this appeal has already been considered and decidedby the Co-ordinate Bench of this Court in the matter of PrincipalCommissioner of Income Tax Jaipur-II, Jaipur Vs. Rajasthan RajyaVidyut Utpadan Nigam Ltd (D.B. Income Tax Appeal No.329/2018,where in on 26.09.2024 the following order was passed:- "1. This appeal is filed under Section 260Aof the Income Tax Act, 1961 (for short ‘theAct’) against the order dated 01.06.2018passed by the Income Tax AppellateTribunal, Jaipur Bench, Jaipur (for short‘the Tribunal’). of the Income Tax Act, 1961 (for short ‘theAct’) against the order dated 01.06.2018passed by the Income Tax AppellateTribunal, Jaipur Bench, Jaipur (for short‘the Tribunal’). 2. The brief facts are that the respondent-company is engaged in distribution ofelectricity. The return for assessment year2009- 10 was filed and the assessmentwas finalized under Section 143(3) of theAct. The two issues arose in theassessment proceedings. Firstly, candeduction be allowed if employees’ shareof provident fund is deposited beyond thedate stipulated in the Employees’Provident Funds and Miscellaneouscompany is engaged in distribution ofelectricity. The return for assessment year2009- 10 was filed and the assessmentwas finalized under Section 143(3) of theAct. The two issues arose in theassessment proceedings. Firstly, candeduction be allowed if employees’ shareof provident fund is deposited beyond thedate stipulated in the Employees’Provident Funds and Miscellaneous Provisions Act, 1952 (for short ‘EPF Act’)and Employees’ State Insurance Act 1948(for short ‘ESI Act’). Secondly, the effectof late deposit of TDS on claimingdeduction of the expenditure. 3. The appeal filed by the respondent wasaccepted by the Commissioner of IncomeTax (Appeal) and the appeal filed by theappellant was dismissed by the Tribunal,hence this appeal. 4. The appeal was admitted on19.05.2023 formulating following twosubstantial questions of law:- “(1) Whether the view taken bythe ITAT that employees’contribution to Provident Fundand ESI is governed by theprovisions of Section 43B of theIncome Tax Act, 1961 and notby Section 36(1)(va) read withSection 2(24)(x) of the IncomeTax Act, 1961 is sustainable inthe ITAT that employees’contribution to Provident Fundand ESI is governed by theprovisions of Section 43B of theIncome Tax Act, 1961 and notby Section 36(1)(va) read withSection 2(24)(x) of the IncomeTax Act, 1961 is sustainable in law in view of the decision ofthe Hon’ble Supreme Court inthe case of Checkmate Services P Ltd Vs. Commissioner ofIncome Tax-I (Civil AppealNo.2833 of 2016 decided onIncome Tax-I (Civil AppealNo.2833 of 2016 decided on 12.10.2022)? (2) Whether in the facts andcircumstances of the case, thecircumstances of the case, the ITAT was justified in law indeletingadditionofRs.4987507/-madefordeletingadditionofRs.4987507/-madefor depositing the employees’contribution to Provident Fundbeyond the prescribed timelimit provided in the respectiveActs? contribution to Provident Fundbeyond the prescribed timelimit provided in the respectiveActs? law in view of the decision ofthe Hon’ble Supreme Court inthe case of Checkmate Services P Ltd Vs. Commissioner ofIncome Tax-I (Civil AppealNo.2833 of 2016 decided onIncome Tax-I (Civil AppealNo.2833 of 2016 decided on 12.10.2022)? (2) Whether in the facts andcircumstances of the case, thecircumstances of the case, the ITAT was justified in law indeletingadditionofRs.4987507/-madefordeletingadditionofRs.4987507/-madefor depositing the employees’contribution to Provident Fundbeyond the prescribed timelimit provided in the respectiveActs? contribution to Provident Fundbeyond the prescribed timelimit provided in the respectiveActs? (3) Whether in the facts andcircumstances of the case theITAT was justified in law indeleting the disallowance ofRs.3581966000/- made onaccount of advance againstdepreciation deferred withoutappreciating that the same is ahead created as an internalarrangement and does notaffect the nature of receipts asrevenue receipts?” circumstances of the case theITAT was justified in law indeleting the disallowance ofRs.3581966000/- made onaccount of advance againstdepreciation deferred withoutappreciating that the same is ahead created as an internalarrangement and does notaffect the nature of receipts asrevenue receipts?” 5. Heard learned counsel for the parties. 6. The substantial questions No.1 and 2are covered by the decision of theSupreme Court in the case of CheckmateServices Pvt. Ltd. Vs. Commissioner ofIncome Tax-1 reported as (2022) 448ITR 518. It was held that share of theare covered by the decision of theSupreme Court in the case of CheckmateServices Pvt. Ltd. Vs. Commissioner ofIncome Tax-1 reported as (2022) 448ITR 518. It was held that share of the employee in the provident fund deductedby the employer, has to be deposited asper the due date fixed by the EPF Act andESI Act concerned and not as per Section43B of the Act. There is no leeway withthe assessee in depositing of amount ofemployees contribution under EPF Act andESI Act, beyond the due date asprescribed by the respective Act. It is onlyon the deposit in compliance with theprovisions of the EPF Act and ESI Act, theretained amount is treated for deduction. The relevant portion of the judgment isquoted below:- “54. In the opinion of this Court,the reasoning in the impugnedjudgment that the non-obstanteclause would not in any mannerdilute or override the employer'sobligation to deposit the amountsretained by it or deducted by itfrom the employee's income,unless the condition that it isdeposited on or before the duedate, is correct and justified. Thenon-obstante clause has to beunderstood in the context of theentire provision of Section 43Bwhich is to ensure timely paymentbefore the returns are filed, ofcertain liabilities which are to beborne by the assessee in the formof tax, interest payment and otherstatutory liability. In the case ofthese liabilities, what constitutesthe due date is defined by thestatute.Nevertheless,theassessees are given some leewayin that as long as deposits aremade beyond the due date, butbefore the date of filing thereturn, the deduction is allowed.That, however, cannot apply inthe case of amounts which areheld in trust, as it is in the case ofemployees' contributions- whichare deducted from their income.They are not part of the assesseeemployer's income, nor are theyheads of deduction per se in theform of statutory pay out. Theyare others' income, monies, onlydeemed to be income, with theobject of ensuring that they arepaid within the due date specifiedin the particular law. They have tobe deposited in terms of such welfare enactments. It is upondeposit, in terms of thoseenactments and on or before thedue dates mandated by suchconcerned law, that the amountwhich is otherwise retained, anddeemed an income, is treated as adeduction. Thus, it is an essentialcondition for the deduction thatsuch amounts are deposited on orbefore the due date. If suchinterpretation were to be adopted,the non-obstante clause underSection 43B or anything containedin that provision would notabsolve the assessee from itsliability to deposit the employee’scontribution on or before the duedate as condition for deduction.”7. In view of the decision of the SupremeCourt in the case of Checkmate (supra)the substantial questions No.1 and 2 areanswered in favour of the appellant-Department. 8. With regard to substantial questionNo.3, learned counsel for the respondentsubmits that the question is covered bythe decision of the High Court of PunjabandHaryanainthecaseofCommissionerofIncomeTax,Faridabad Vs. NHPC Ltd. reported as2018:PHHC:016385-DBwherein theDivision Bench relying upon the decision ofthe Supreme Court in the case ofNationalHydroElectricPowerCorporation Ltd. Vs. Commissioner ofIncome Tax reported as (2010) 320ITR 374. It is further argued that theDepartment has accepted this decision. 9. It was held that Advance AgainstDepreciation was not income received forthe relevant accounting year and cannotbe carried forward through the Profit andLoss account. The question was answeredin favour of the assessee. 10. Learned counsel for the appellant-Department is not in a position todistinguish the decision relied upon and torefute the fact that the decision of Punjab& Haryana High Court was accepted by thedepartment. The substantial question No.3is answered against the appellant-Department. 11. The appeal is accordingly disposed of." Learned counsel for the respondents has not disputed this fact. In that view of the matter, this appeal is disposed of in viewof the judgment passed by the Co-ordinate Bench of this Court inthe matter of Principal Commissioner of Income Tax Jaipur-II,Jaipur (supra). (VINOD KUMAR BHARWANI),J(INDERJEET SINGH),J Upendra Pratap Singh /91