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Judgment
PER SATBEER SINGH GODARA, JM:
These assessee’s three appeals ITA Nos. 1 454 to 1456/Del/2026 for assessment years 2019-20 to 2021-22 arise against the Commissioner of Income Tax (Appeals)/Addl. JCIT(A)-1 (for short, ‘CIT (A)’), Kolkata’s as many orders dated 15.12.2026 passed in DINs & or der Nos. ITBA/APL/S/250/2025-26/1083687971(1), ITBA/APL /S/250 /2025 -26/1083688189(1) & ITBA/APL/S/250/2025-26/1083688468(1);respectively,involving proceedings u/s 143(1) of the Income Tax Act, 1961; here inafter referred to as, “the Act”.
Heard both the parties at length. Case files perused.
It emerges at the outset that the assessee/appellant raises its identical substantive ground in all the three instant cases that both the learned lower authorities have erred in law and on facts in invoking section 36(1)(v)(a) PF/ESI contribution disallowance(s) involving varying sums, assessment year wise, respectively forming the sole subject matter for the tribunal’s apt adjudication herein.
That being the case, Mr. Kapoor’s first and foremost argument is that the aforesaid issue of PF/ESI disallowance involving the employees’ contribution is very much debatable one as per hon’ble apex court’s recent interim order in Woodland (Aero Club) (P.) Ltd. Vs. ACIT (2026) 187 taxmann.com 49(SC) admitted on 27.01.2026; reading as under:
ITEM NO.5 COURT NO.6 SECTION XIV
SUPREME COURT OF INDIA RECORD OF PROCEEDINGS
Petition for Special Leave to Appeal (C) No.1532/2026
[Arising out of impugned final judgment and order dated 08-09-2025 in ITA No. 267/2023 passed by the High Court of Delhi at New Delhi]
WOODLAND (AERO CLUB) PRIVATE LIMITED DIRECTOR Petitioner(s)
VERSUS
ASSISTANT COMMISSIONER OF INCOME TAX Respondent(s)
(FOR ADMISSION)
Date : 27-01-2026 This petition was called on for hearing today.
CORAM :
HON'BLE MR. JUSTICE J.B. PARDIWALA HON'BLE MR. JUSTICE SANDEEP MEHTA
For Petitioner(s) :
Mr. S Ganesh, Sr. Adv. Mr. Diggaj Pathak, AOR Mr. Anukalp Jain, Adv. Mr. Abhijit Mittal, Adv. Ms. Shweta Sharma, Adv. Ms. Trishita Bera, Adv. Ms. Nishtha Nanda, Adv. Ms. Shaivya Singh, Adv. Ms. Vaibhavi Pathak, Adv.
For Respondent(s) :
UPON hearing the counsel the Court made the following ORDER
1.The High Court recorded the following findings as regards as the issue in question.
i.Employer's contributions under Section 36(1)(iv) and employees' contributions covered under Section 36(1)(va) read with Section 2(24)(x) are fundamentally different in nature and must be treated separately. ii. Employees' contribution deducted from their salaries are deemed to be income under Section 2(24)(x) and are held in trust by the employer. The employers can claim deduction only if they deposit these amounts on or before the statutory due date under Section 36(1)(va).
iii.The non-obstante clause in Section 43B cannot be applied to employees' contributions governed by Section 36(1)(va).
iv.Alom Extrusions (supra) has been distinguished as the same has not considered Sections 2(24)(x) and 36(1)(va).
v.Explanation 5 to Section 43B was not considered at all while arriving at the decision that employees' contribution must be deposited on or before the due dates under relevant statutes."
2.As per Section 2(24)(x), any amount recovered by the employer from the employees towards their contribution to any provident or superannuation fund or any other fund set up under the provisions of the ESI Act, 1948 or any other fund for the welfare of the employees is income.
3.Section 36(1)(va) of the Act says that any sum so received by the assessee - employer from his employees to which provisions of Section 2(24)(x) applies, the assessee - employer shall be entitled to deduction while computing income under Section 28, if such sum is credited by the assessee - employer to the employees account before the due date.
4.The Explanation to Section 36(1) (va) says that the 'due date' means the date by which the assessee -employer is required to credit the employees contribution in the relevant fund under any Act, Rule, Order or Notification issued thereunder.
5.There are two School of thoughts as regards the interpretation of the words "due date".
6.A combined reading of the Section 2(24)(x) and that Section 36(1) (va) of the Act, prima facie is indicative that any sum received by the assessee - employer from any of his employees as contribution towards PF & ESI is the income of the assessee under Section 2(24)(x) and it continues to be so, unless it is credited by the assessee - employer to the employee's account in the relevant fund on or before the due date specified under the relevant PF, ESI Act.
7.The employee's contribution towards PF, ESI received by the assessee - employer is his income under Section 2(24)(x) and if he wants to have it deducted from his income under Section 36(1)(va), he must credit the same to the employee's account in the relevant fund on or before the due date specified under the relevant PF,ESI Act.
8.The aforesaid view is supported by the following judgments of the High Courts:-
(i)Unifac Management Services (India) (P.) Ltd. v. Dy. CIT [2018] 100 taxmann.com244 [2019] 260 Taxman 60/[2018] 409 ITR 225 (Mad.), (ii) CIT v. Gujarat State Road Transport Corpn. [2014]41 taxmann.com 100/366 ITR 170/223 Taxman 398 (Guj.), (iii) CIT v. Merchem Ltd. [2015] 61 taxmann.com 119/235 Taxman 291/378 ITR 443 (Ker.), (iv) B.S. Patel v. Dy. CIT [2010] 326 ITR 457/[2008] 171 Taxman 304 (MP) and (v) Popular Vehicles & Services Pvt Ltd v. CIT [2018] 96 taxmann.com 13/257 Taxman 120/406 ITR (Ker).
9.The other view is that there is no difference between employees and employer contribution to PF, ESI and both would be guided by the provisions of Section 43B of the Act so as to allow deduction in the hands of the assessee - employer if the contributions are deposited on or before the due date of filling of return under Section 139(1) of the Income Tax Act, 1961.
10.The aforesaid view is supported by the following Judgments:- (i) CIT v. Aimil Ltd. [2010] 188 Taxman 265/321 ITR 508 (Delhi HC), (ii) Pr. CIT v. Plamman HR (P) Ltd. (IT Appeal No. 170 of 2018, dated 12.02.2018 (Delhi HC). (iii) CIT v. Nipso Ployfabriks Ltd. [2013] 350 ITR 327/213 Taxman 376/30 taxmann.com90 (HP). (iv) Sagun Foundry (P.) Ltd. v. CIT [2017] 78 taxmann.com 47 (All). (v) CIT v. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. [2014] 366 ITR 163/[2013] 217 Taxman 64 (Mag.)/35 taxmann.com 616 (Raj.). (vi) CIT v. Sabari Enterprises [2008] 298 ITR 141 (Kar). (vii) CIT v. Hemla Embroidery Mills (P.) Ltd. [2014] 366 ITR 167/[2013] 217 Taxman 207/37 taxmann.com 160 (Punj. & Har.). (viii) CIT v. Ghatge Patil Transports Ltd. [2014] 368 ITR 749/[2015] 53 taxmann.com 141/228 Taxman 340. (ix) Bihar State Warehousing Corpn. Ltd. v. CIT [2016]
The assessee’s second substantive argument raise d herein is that even if it is he ld that such a disallowance could indeed by made on account of the assessee’s failure in no t ensuring compliance to the provisions of the correspo nding statute, sectio n 143(1) “processing” in all the three instant cases is also not sustainable in law. And that his third substantive argument is that is in light of Co mmissioner of Income T ax v. Punjab Financial Corporation Ltd. (200 7) 295 ITR 510 (P&H) & Commissioner of Income-Tax vs. High Land Pro duce Co. Ltd. [1976] 102 ITR 8 03 (Ker) that such a claim could indee d be held allowable u/s 37 of the Act as well.
The Revenue on the other hand places strong re liance on both the learned lower authorities’ action invoking the impugned sectio n 36(v)(a) PF/ESI disallowance(s) in the assessee’s hands.
We have given our thoughtful consideration to the assessee’s and the Revenue’s foregoing vehe ment co ntentions. We find no reaso n to interfere with the learned low er authorities’ respective findings. We make it clear first o f all that hon’ble apex court’s larger bench decision in Checkmate Services Pvt. Ltd. Vs. CIT [2022] 143 taxmann.com 278(SC) has indeed settled the law against the assessee and in the department’s favour that section 36(1)(v)(a) disallowance gets attracted in an instance where the former does not comply with the provisions of the corresponding statute. Their lordships further hold that relevant “due date” is not of filing section 139(1) return as well’. The same has admittedly not been considered in the admission order of Woodland (Aero Club) (P.) Ltd. case. We thus place our heavy reliance on the lordships “larger” bench decision to adjudicate the issue in the department’s favour in very terms.
So far as the assessee’s se cond argument that the impugne d disallowance could not have been made in section 143(1 ) processing herein, we find that hon’ble jurisdictional high court in Wood land (Aero Club) (P.) Ltd. Vs . ACIT (202 5) 178 ta xmann.co m 207 (Del. ) has r ejected the very stand. We thus decline the assessee’s instant second argument as well.
Lastly comes the asse ssee’s third ar gume nt that such a claim co uld indeed be allowable u/s 37 of the Act as well(supra). We, hereby conclude that the third issue also gets settled in the lordships decision in Woodland (Aero Club) (P .) Ltd. as well as in Checkmate Services Pvt. Ltd. Vs. CIT [2022] 143 taxmann.com 278(SC) upholding sectio n 36(1) disallowance w hich is hereby decide d in the department’s favo ur in very te rms. No other ground or argument has been raised before us.
These assessee’ s three appeals IT A Nos. 1454 to 1456/Del/2026 are dismissed. A copy of this co mmon order be placed in the respective case files.