2015 (6) TMI 489 - AT - Income Tax

Late deposit of employee s contribution towards provident fund - disallowance of Claim u/s 43B - Held that - In the assessment order AO has categorically stated the amount due for which month in respect of EPF and ESI deposits and has stated the due dates for these deposits to have been deposited and on which date actually these deposits were made by the assessee. The dates of deposits are mentioned between 05th July 2001 to 26th April 2002. We find that the latest payment is made on 26th April 2002 and assessee being a limited company had filed its return on 20th October, 2002, so the assesse had deposited the amount before the due date of filing of the return. Thus, it is clear beyond doubt that all the payments which have been disallowed were made much earlier to the due date of filing of the return. The disallowance is not made by the AO on the ground that there is no proof of making such payment but disallowance is made only on the ground that these payments have been made beyond the due dates of making these payments as stipulated under the respective statute. Thus, it was not an issue that the payments were not made by the assessee on the dates which have been stated to be the dates of deposits in the assessment order. In such a scenario, according law clarified by Hon ble Supreme Court in the case of CIT Vs Vinay Cement Ltd, 2007 (3) TMI 346 - Supreme Court of India that no disallowance could be made if the payments are made before the due date of filing the return of income. - Decided in favour of assessee.

Summary

Issues:
- Late deposit of employee's contribution towards provident fund
- Late deposit of employee's contribution towards ESI

Analysis:
1. Late Deposit of Employee's Contribution Towards Provident Fund:
- The Revenue challenged the deletion of an addition of Rs. 32,29,938 made by the Assessing Officer due to late deposit of employee's contribution towards provident fund.
- The Assessing Officer observed delays in depositing the provident fund in various months, beyond the due dates.
- The AO disallowed the amount as a deduction under section 36(1)(va) of the Income Tax Act, 1961, considering it as income of the assessee under section 2(24)(x).
- The AO's decision was based on the failure of the assessee to deposit the provident fund within the stipulated period.
- The CIT(A) partly allowed the appeal, and the Revenue appealed further.
- The Tribunal noted that all payments were made before the due date of filing the return, following the law clarified by the Hon'ble Supreme Court in CIT Vs Vinay Cement Ltd.
- Citing the decision in CIT Vs. Aimil Limited, the Tribunal dismissed the Revenue's appeal, emphasizing that the benefit could be claimed if the actual payment was made before the return was filed.

2. Late Deposit of Employee's Contribution Towards ESI:
- The Revenue also contested the deletion of an addition of Rs. 84,076 due to late deposit of employee's contribution towards ESI.
- Similar to the provident fund issue, the Assessing Officer disallowed this amount as a deduction under section 36(1)(va) of the Income Tax Act, 1961, treating it as income of the assessee under section 2(24)(x).
- The Tribunal's decision on this issue aligned with its decision on the provident fund matter, emphasizing the importance of payments being made before the due date of filing the return.
- Relying on legal precedents and the principle laid down by the Hon'ble Supreme Court, the Tribunal dismissed the Revenue's appeal, maintaining that the benefit could be availed if the actual payment was made before the return was filed.

In conclusion, the Tribunal upheld the CIT(A)'s decision to delete the additions related to late deposits of employee contributions towards provident fund and ESI, emphasizing the timely payment before the due date of filing the return as the crucial factor in determining the deductibility of these contributions.