2017 (9) TMI 1803 - AT - Income Tax

Addition u/s 43B - Belated remittance of employees contribution of PF & ESI U/s 36(1)(va) r.w.s.2(24)(x) - HELD THAT - As decided in own case 2016 (9) TMI 1040 - ITAT VISAKHAPATNAM as relying on ESSAE TERAOKA PVT LTD VERSUS DEPUTY COMMISSIONER OF INCOME-TAX 2014 (3) TMI 386 - KARNATAKA HIGH COURT and TETRA SOFT (INDIA) PVT. LTD. 2015 (10) TMI 1601 - ITAT HYDERABAD there is no distinction between employees and employer contribution to PF, and if the total contribution is deposited on or before the due date of furnishing return of income u/s 139(1) of the Act, then no disallowance can be made towards employees contribution to provident fund. The CIT(A) after considering the relevant details rightly deleted the additions made by the A.O. - Decided in favour of assessee

Summary

Issues:
Appeal against addition of employees' contribution to PF & ESI, Interpretation of Sec.36(1)(va) r.w.s.2(24)(x) of the I.T. Act, Entitlement of deduction for belated remittance.

Analysis:
1. Issue of Addition of Employees' Contribution: The assessing officer disallowed ?55,24,096 towards belated remittance of employees' contribution to PF & ESI as it was remitted beyond the time limit allowed under the PF Act. However, the CIT(A) deleted the addition, stating that deduction is allowed if payment is made before the due date of filing the return of income. Various judicial precedents were cited to support this interpretation, emphasizing that Sec.43B allows deduction for payments made before filing the income tax return.

2. Interpretation of Sec.36(1)(va) r.w.s.2(24)(x) of the I.T. Act: The Ld.CIT(A) referred to cases like Essae Teraoka (P) Ltd. Vs. DCIT and CIT Vs. Kichha Sugar Co. Ltd. to argue that employees' contribution to PF should be considered for deduction under Sec.36(1)(va) read with Sec.43B(b) of the I.T. Act. The judgments highlighted that the due date for filing the return of income should be the benchmark for allowing deductions related to PF contributions.

3. Entitlement of Deduction for Belated Remittance: The Tribunal upheld the CIT(A) order based on previous decisions, stating that no disallowance can be made if the total contribution is deposited on or before the due date of furnishing the return of income under Sec.139(1) of the Act. Citing precedents like Essae Teraoka (P) Ltd. case and Tetra Soft (India) Pvt. Ltd. case, the Tribunal emphasized that there is no distinction between employees' and employer contribution to PF for deduction purposes.

4. Conclusion: The Tribunal dismissed the appeal of the revenue and allowed the cross objection of the assessee, affirming the entitlement of deduction for employees' contribution to PF made before the due date of filing the return of income. The decision was based on consistent judicial interpretations and precedents, ensuring clarity and uniformity in the application of tax laws regarding PF contributions.

This detailed analysis of the judgment highlights the key issues, legal interpretations, and the rationale behind the decision, providing a comprehensive understanding of the case.