2014 (7) TMI 41 - AT - Income Tax

Ascertainment of date of deposits - Late payment of PF and ESIC on employee s contribution Held that - Neither in the order of AO nor in the order of CIT(A) the dates of deposit have been mentioned - there was delay in making the deposit but on what exact dates month-wise deposits have been made, was not noted by the Revenue Authorities thus, the matter is liable to be remitted back to the AO for fresh adjudication Decided in favour of Assessee.

Summary

Issues:
Appeal against addition on account of late payment of PF and ESIC employee contributions.

Analysis:
1. Late Payment of PF and ESIC Contributions:
The appeal arose from the order confirming an addition of Rs. 3,67,042 on account of late payment of PF and ESIC employee contributions. The AO invoked Section 36(1)(va) r.w.s. 2(24)(x) of the IT Act to disallow this amount. The CIT(A) held that Section 40B applies to employers' contributions, not employees'. The amendment in Section 43B was deemed inapplicable to employees' contributions. The absence of a High Court order led to the AO's justified addition. The assessee referred to a previous ITAT decision in their favor for A.Y. 2005-06, citing relevant case law.

2. Legal Precedents and Interpretation:
The ITAT considered various legal precedents, including the decision in the case of ITO Ward-3 Vapi Vs. Gujarat Themis Biosyn Ltd., where the issue of PF contributions was discussed. Reference was made to the Delhi High Court's ruling in P.M. Electronics Ltd. and the Supreme Court's decision in CIT vs. Alom Extrusions Ltd. The retrospective application of amendments to Section 43B was highlighted, emphasizing the deductibility of PF contributions made before the due date of filing returns.

3. Remittal and Directions for Reassessment:
Upon reviewing the written submissions and relevant case law, the ITAT remitted the issue back to the AO for fresh consideration. The absence of specific dates for depositing the contributions necessitated a reevaluation in light of the jurisdictional High Court's orders and prevailing legal provisions. The AO was instructed to consider the Supreme Court decisions in Alom Extrusions Ltd. and Vinay Cement. The appeal was allowed for statistical purposes only, with the issue to be re-examined by the AO.

4. Final Decision:
Ultimately, the ITAT allowed the appeal solely for statistical purposes, directing a reevaluation by the AO based on specific instructions and legal precedents. The decision highlighted the importance of precise deposit dates and adherence to relevant case law in determining the deductibility of PF and ESIC contributions. The judgment underscored the need for a thorough reassessment in line with established legal principles and court rulings.