C/TAXAP/51/2020 ORDER IN HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL NO. 51 of 2020 SEQUEL LOGOSTICS PRIVATE LIMITED Versus CHIEF COMMISSIONER OF INCOME TAX Appearance: M/S WADIAGHANDY AND CO(5679) for Appellant(s) No. 1 for Opponent(s) No. 1 CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 03/02/2020 ORAL ORDER (PER : HONOURABLE MR.JUSTICE BHARGAV D. KARIA) 1. This appeal is filed by assessee under Section 260A of Income Tax Act, 1961 (for short Act, 1961 ) against order dated 22nd March, 2018 passed by Income Tax Appellate Tribunal Ahmedabad Bench, Ahmedabad, in ITA No.3067/Ahd/2016 for A.Y.2012-13. 2. following questions are proposed as substantial questions of law, for consideration of this Court: (i) Whether Appellate Tribunal was right in law and in facts in confirming disallowance under Section 36(a)(va) read with Section 2(24)(x) of Income Page 1 of 5 Downloaded on : Tue Apr 21 10:31:14 IST 2020 C/TAXAP/51/2020 ORDER Tax Act, 1961, paid by Appellate towards employees contribution to Provident Fund and Employees State Insurance? (ii) Whether due date for payment of contribution to Provident Fund and Employees State Insurance Scheme is to be considered from 15 days from close of every month in which wages are disbursed or 15 days from date from which wages of employees becomes due? 3. appellant-assessee filed his return claiming deduction of Rs.15,86,762/-, being amount paid towards employees contribution to Provident Fund ( PF ) and Employees State Insurance ( ESI ) under Section 36(1)(va) read with Section 2(24)(x) of Act, 1961. 4. Assessing Officer while passing Assessment Order, under Section 143(3) of Act, disallowed amount of Rs.15,86,762/-, claimed as deduction by appellant-assessee towards PF and ESI, on ground that same was not paid within due date. 5. assessee, being aggrieved by Assessment Order, preferred appeal before CIT(A). CIT(A) partly allowed appeal holding that for considering due date of payment to PF and ESI contribution, date of disbursement of wages is to be considered and not month / period with respect to which wages pertain to. 6. CIT(A), relied upon decision of this Page 2 of 5 Downloaded on : Tue Apr 21 10:31:14 IST 2020 C/TAXAP/51/2020 ORDER Court in case of Ambalal Sarabhai Enterprise Limited vs. Assistant Commissioner of Income Tax Circle 1 (Tax Appeal No.1385 of 2008), re-calculated contribution to PF and ESI made within 20 days and 21 days respectively of disbursement of wages and restricted dis-allowance to Rs.8,03,104/-. 7. appellant-assessee therefore being aggrieved of partly dis-allowance of Rs.8,03,104/-, preferred appeal before Tribunal. However, Tribunal, relied upon decision of this Court in case of CIT vs Gujarat State Road Transport Corporation 366 ITR 170 (Gujarat), rejected appeal filed by appellant. 8. Tribunal held that in case of delayed deposition of employees contribution to PF and ESI, same will not be deductable in computing income, under Section 28 of Act. 9. Learned advocate Mr.Tanvish Bhatt appearing for appellant submitted that decision of this Court in case of CIT vs. Gujarat State Road Transport Corporation (Supra) is carried to Hon ble Supreme Court and SLP is pending. It was further submitted that assessee would like to keep issue alive and hence preferred appeal after considerable delay, which is already condoned by this Court. 10. It was submitted that in case of M/s Page 3 of 5 Downloaded on : Tue Apr 21 10:31:14 IST 2020 C/TAXAP/51/2020 ORDER Checkmate Facility and Electronic Solutions Pvt. Ltd. versus Deputy Commissioner of Income Tax Circle 1 [Tax Appeal No.1256 of 2018], decided on 15th October, 2018, this Court has applied decision of CIT vs. Gujarat State Road Transport Corporation (Supra) and held as under: This provision thus requires employer before paying employee his wages to deduct employee s contribution along with employer s own contribution as fixed by Government. It is further required that he shall within fifteen days of close of every month pay same to fund such contribution and administrative charges. In terms of this provision thus, after deducting employee s contribution towards funds, same has to be deposited with Government within fifteen days of close of every month. Reference to fifteen days of close of month must be in relation to month during which payment of wages is to be made and corresponding liability to deduct employee s contribution to fund arises. expression within fifteen days of close of every month therefore must be interpreted as having reference to close of month, for which, wages are required to be paid with corresponding duty to deduct employee s contribution and to deposit same in fund. 11. Moreover, in case of Ask Me Lab Con Services Ltd V/s. Income Tax Officer Ward 1(1)(4)[Tax Appeal No.25 of 2019], Co-ordinate Bench of this Court, on 11th June, 2019, by following decision given in case of M/s Checkmate Facility and Electronic Solutions Pvt. Ltd. versus Deputy Commissioner of Income Tax Circle 1, dealt with issue of due date Page 4 of 5 Downloaded on : Tue Apr 21 10:31:14 IST 2020 C/TAXAP/51/2020 ORDER of deposition to PF and ESI is to be considered from close of month, for which charges is required to be paid by employer. 12. Reliance placed by learned advocate for appellant on decision given by this Court in case of Ambalal Sarabhai Enterprise Limited (Supra) is also not applicable in facts of present case, as said decision was with regard to liability to deposit employer s contribution to PF and ESI. Whereas, in facts of present case, provisions of Section 36(i)(v)(a) of Act, 1961 would be applicable. Therefore, ratio of decisions given in case of CIT Vs. Gujarat State Road Transport Corporation (Supra) as well as in case of Checkmate Facility and Electronic Solutions Pvt. Ltd.(Supra) is applicable. 13. In such circumstances, none of questions of law, proposed by appellant, can be termed as substantial question of law. appeal therefore fails and accordingly dismissed. (J. B. PARDIWALA, J) (BHARGAV D. KARIA, J) PALAK Page 5 of 5 Downloaded on : Tue Apr 21 10:31:14 IST 2020 Sequel Logostics Private Limited v. Chief Commissioner of Income-tax