The Jaipur bench of the Income Tax Appellate Tribunal (ITAT) held that the addition shall be made in respect of the employee’s contribution to Employee State Insurance (ESI) and Provident Fund (PF) which has not been deposited within the stipulated date.
The issue is that for the year under consideration, an intimation was issued under Section 143(1) of the Income Tax Act, 1961. In the said intimation adjustment of PF & ESI was not paid within time for an amount of Rs. 41,89,576/- and unpaid service tax was disallowed as per provision of Section 43B of the Income Tax Act for an amount of Rs. 1,07,621/-.
The Departmental Representative relied upon the order of Apex Court in the case of CIT-1 vs. Checkmate Service Pvt. Ltd. and submitted that considering the judgment of the apex court there is no benefit of relying on the judgment of this bench as the issue is decided by the apex court in favour of the revenue and therefore, for PF & ESI he supported the finding of the lower authority.
As regards the disallowance of service tax made under Section 43B of the Income Tax Act since there is an amendment in Section 145 of the Income Tax Act so as to include the service tax as part of turnover and the assessee is supposed to declare the gross amount and thus, the service tax forms part of the profit and loss account and thereby the provision of Section 43B of the Income Tax Act squarely apply in this case.
The Two-member bench comprising of S. Seethalakshmi (Judicial member) and Rathod Kamlesh Jayantbhai (Accountant member) held that the Commissioner of Income Tax (Appeal) [CIT(A)] has followed the judgment of CIT-1 vs. Checkmate Service Pvt. Ltd. and disallowance so made was in accordance with law clarified by the Apex Court. Therefore, the appeal of the assessee was dismissed.
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