2012 (9) TMI 1144 - AT - Income Tax

Addition on account of late payment of employees contribution of ESIC & PF - Held that - We have no hesitation in holding that the employees contribution towards PF paid by the assessee before the due date of filing of return u/s 139(1) of the Act for the assessment year under consideration is admissible. Consequently, findings of the ld. CIT(A) are upheld. With these directions, ground no. 1 in the appeal is dismissed.

Summary

Issues Involved:
1. Late payment of employees' contribution of ESIC & PF.
2. Interpretation of provisions of section 2(24)(x) read with sec. 36(1)(va) of the Income-tax Act, 1961.
3. Application of judicial precedents regarding the admissibility of employees' contribution towards PF.

Analysis:

Issue 1: Late payment of employees' contribution of ESIC & PF
The appeal by the Revenue challenged the deletion of an addition of Rs. 33,11,156 made by the Assessing Officer due to late payment of employees' contribution towards PF by the assessee. The AO disallowed the amount based on provisions of section 2(24)(x) read with sec. 36(1)(va) of the Act. The ld. CIT(A) allowed the claim of the assessee citing the decision of the Hon'ble jurisdictional High Court in CIT Vs. ALMIL Ltd. The Tribunal upheld the CIT(A)'s decision, emphasizing that employees' contribution towards PF paid before the due date of filing the return u/s 139(1) of the Act is admissible.

Issue 2: Interpretation of provisions of section 2(24)(x) read with sec. 36(1)(va)
The Tribunal considered various judicial decisions, including those of the Hon'ble Supreme Court and High Courts, to interpret the provisions of section 36(1)(va) in conjunction with section 2(24)(x) and section 43B of the Act. It was noted that the deletion of the second proviso to section 43B by the Finance Act, 2003, applied retrospectively from April 1, 1988. The Tribunal highlighted that the Act permits the employer to make delayed deposits of employees' contribution towards PF subject to certain consequences, and the deduction is allowable if the actual payment is made before the return is filed.

Issue 3: Application of judicial precedents
The Tribunal extensively discussed judicial precedents, including decisions by various High Courts and the Supreme Court, to support its conclusion on the admissibility of employees' contribution towards PF. The Tribunal cited cases such as CIT vs. Vinay Cement Ltd., CIT vs. Dharmendra Sharma, and CIT vs. PM Electronics Ltd. to establish the legal principles governing the treatment of employees' contribution under the relevant Acts. The Tribunal's decision aligned with the principles laid down in these precedents, emphasizing the retrospective application of certain amendments and the admissibility of deductions based on timely deposits.

In conclusion, the Tribunal dismissed the appeal by the Revenue, upholding the decision of the ld. CIT(A) regarding the admissibility of employees' contribution towards PF. The Tribunal's analysis relied on legal provisions, judicial precedents, and the interpretation of relevant sections of the Income-tax Act, 1961 to arrive at its decision.