2017 (12) TMI 1685 - 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) - revision u/s 263 - HELD THAT - As decided in EASTERN POWER DISTRIBUTION COMPANY OF A.P. LTD. AND VICA-VERSA 2016 (9) TMI 1040 - ITAT VISAKHAPATNAM 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) then no disallowance can be made towards employees contribution to provident fund. Revision u/s 263 - Commissioner was not justified in setting aside the order of the A.O. on this aspect merely because he holds a different view on the matter. Therefore, the appeal filed by the assessee is allowed and the order passed by the CIT is set aside.- Decided in favour of assessee

Summary

Issues involved:
Interpretation of section 43B of the Income Tax Act regarding employees' contribution towards EPF and the due date for payment.

Analysis:
The judgment involved a dispute regarding the timing of employees' contribution towards EPF under section 43B of the Income Tax Act. The Ld. Commissioner held that the contribution must be made before the due date or within the grace period, as any payment made thereafter would be disallowed. The assessee cited various decisions, including a Supreme Court case, to argue that payments made before the due date for filing the return of income should not be disallowed. However, the Ld. Commissioner disagreed, stating that the decisions cited were not applicable based on a plain reading of the provision.

Upon appeal, the assessee relied on a decision by the ITAT Visakhapatnam bench in a similar case, where it was held that as long as the payment is made on or before the due date for filing the return of income, no disallowance should occur. The Tribunal noted that the revisional authority should have followed the view in favor of the assessee when there are two possible interpretations. The Ld. D.R., on the other hand, supported the revisional authority's order.

After considering the submissions and the provisions of section 43B read with section 36(1)(va) of the Act, the ITAT Visakhapatnam bench concluded that no disallowance is permissible if the employees' contribution is deposited within the time provided under section 139(1) of the Act. The Tribunal found that the Ld. Commissioner was unjustified in setting aside the A.O.'s order merely due to a difference in opinion. Consequently, the appeal by the assessee was allowed, and the CIT's order was overturned.

In the final pronouncement, the ITAT Visakhapatnam bench ruled in favor of the assessee, emphasizing that the timing of employees' contribution towards EPF in relation to the due date for filing the return of income is crucial in determining disallowances under section 43B of the Income Tax Act.