2015 (5) TMI 78 - HC - Income Tax

Deduction under section 36(1)(va) - provident fund contribution made by the assessee beyond the period specified in Employees Provident Fund Scheme, 1952 - ITAT allowed the claim - Held that -Before the Tribunal, we find that the department's representative fairly conceded that the case at hand was covered against the revenue by the decision of Marubeni India (P) Ltd. V/s. CIT ( 2006 (6) TMI 143 - ITAT DELHI-A) and Kanoi Paper & Industries Ltd. V/s. JCIT (2001 (5) TMI 139 - ITAT CALCUTTA-E) and especially in view of this position, the Tribunal upheld the order of the Commissioner of Income Tax (Appeals) by observing that the payment of contribution although made beyond the statutory period of 15 days from the end of the month in which wages are paid was made within the grace period of five days. The facts do not admit of any wanton negligence in complying with statutory requirements. The payment was in fact made within the grace period allowed to the assessee. The payment having been made within the grace period of five days, we are of the view that there is no reason to interfere. In the facts of the present case, the appeals do not raise any substantial question of law - Decided in favour of assessee.

Summary

Issues:
1. Deduction under section 36(1)(va) of the Income Tax Act, 1961 for provident fund contributions made beyond the specified period.

Analysis:
The judgment dealt with three appeals concerning the deduction under section 36(1)(va) of the Income Tax Act, 1961, related to provident fund contributions made beyond the period specified in the Employees Provident Fund Scheme, 1952 for the assessment years 2005-06 to 2007-08. The primary question was whether employees' contributions towards provident fund paid by the assessee beyond the specified period were eligible for deduction under section 36(1)(va) of the Act.

The facts revealed that the assessee, engaged in textile goods processing and trading, filed a Nil income return showing a loss and made provident fund contributions belatedly but within the grace period of five days. The Assessing Officer added the employees' contribution to the total income due to the delay in payment and completed the assessment under section 143 of the Act. The Commissioner of Income Tax (Appeals) allowed the appeal filed by the assessee, which was further upheld by the Tribunal.

The Tribunal observed that the payment towards provident fund contribution, although made beyond the statutory period, was within the allowable grace period of five days. The department's representative acknowledged precedents where similar cases were decided against the revenue. The Tribunal upheld the order of the Commissioner of Income Tax (Appeals) based on the timely payment within the grace period, emphasizing the absence of negligence in complying with statutory requirements. Consequently, the appeals were dismissed as they did not raise any substantial question of law, and no costs were awarded.

In conclusion, the judgment clarified the eligibility of provident fund contributions made within the grace period of five days for deduction under section 36(1)(va) of the Income Tax Act, 1961, even if paid beyond the specified period, emphasizing compliance with statutory provisions and precedents in similar cases.