2010 (8) TMI 1013 - AT - Income Tax

Summary

Issues involved: The issues involved in this judgment are the correctness of the disallowance made by the Assessing Officer for delayed payment of employee's contribution to PF and ESIC, and the applicability of Section 36(1)(va) read with Section 2(24)(x) u/s 43B for such disallowances.

Issue 1: Disallowance of delayed payment of employee's contribution to PF

The Assessing Officer disallowed the delayed payment of employee's contribution to PF, citing non-compliance with Section 36(1)(va) read with Section 2(24)(x). The CIT(A) upheld this disallowance, referring to previous judgments. However, a co-ordinate bench of the Tribunal in another case held that if the employee's contribution is paid before the due date for filing the return, it should be allowed as a deduction under Section 43B. As the assessee in this case paid the contributions before the due date, the Tribunal decided to delete the disallowance, granting relief to the assessee.

Issue 2: Disallowance of delayed payment of employee's contribution to ESIC

Similarly, the Assessing Officer disallowed the delayed payment of employee's contribution to ESIC, also invoking Section 36(1)(va) read with Section 2(24)(x). The CIT(A) affirmed this disallowance based on previous judgments. However, following the same legal reasoning as in the PF contribution case, the Tribunal decided that if the employee's contribution is paid before the due date for filing the return, it should be allowed as a deduction under Section 43B. As the assessee complied with this requirement, the Tribunal ordered the deletion of the disallowance, providing relief to the assessee.

Conclusion: The Tribunal allowed the assessee's appeal, ruling in favor of the assessee by deleting the disallowances made by the Assessing Officer for delayed payment of employee's contribution to PF and ESIC. The Tribunal emphasized the importance of timely payments before the due date for filing the return to qualify for deductions under Section 43B, in line with previous judgments and legal interpretations.