2018 (7) TMI 1998 - AT - Income Tax

Disallowance of employees contribution to Provident Fund (PF) and ESIC - assessee has not deposited the contribution received towards employee s provident fund and ESIC in the govt. account by the due date as specified in the respective accounts - Whether contributions were paid on or before the due date for filing return of income under section 139(1)? - HELD THAT - We have noticed that the assessee has not deposited the contribution received from the employees within the due dates as prescribed under the provident Fund Act ESIC. We consider that in the case of CIT vs. Gujarat State Road Transport Corporation 2014 (1) TMI 502 - GUJARAT HIGH COURT has held that when the employer has not credited the sum received by it as employees contribution to employees account in relevant fund on or before due date as prescribed in explanation to section 36(i)(va) the assessee shall not be entitled to deduction. - Decided against assessee.

Summary

Issues:
1. Disallowance of employees' contribution to Provident Fund and ESIC.

Analysis:
The appeal before the Appellate Tribunal ITAT Ahmedabad pertained to the disallowance made by the assessing officer regarding the employees' contribution to Provident Fund (PF) and ESIC for the Assessment Year 2014-15. The assessee contended that the contributions were made before the due date for filing the income tax return under section 139(1) of the Income Tax Act, 1961. Additionally, the assessee argued that the due date for payment of PF and ESIC should be considered from the end of the month in which the salary is paid, not from the end of the month for which the salary is paid.

During the scrutiny, it was observed that the assessee had not deposited the contributions towards EPF and ESIC in the government account by the specified due dates. The assessing officer disallowed the employees' contributions to PF and ESIC, even after considering the grace period, as per the provisions of the Income Tax Act. The assessee appealed to the CIT(A), who confirmed the disallowances relying on the decision of the jurisdictional high court in the case of CIT vs. Gujarat State Road Transport Corporation.

The Appellate Tribunal noted that the employer had not credited the sum received as employees' contribution to the employees' accounts within the due dates specified under the Provident Fund Act and ESIC. Referring to the decision of the jurisdictional High Court, the Tribunal upheld the CIT(A)'s decision, stating that the assessee would not be entitled to deduction if the sum is not credited by the due date. Consequently, the appeal of the assessee was dismissed, affirming the disallowance of employees' contributions to PF and ESIC.

In conclusion, the Appellate Tribunal upheld the decision of the CIT(A) regarding the disallowance of employees' contribution to Provident Fund and ESIC, based on the failure to credit the sums within the prescribed due dates. The judicial findings and the precedent set by the jurisdictional High Court supported the disallowance, leading to the dismissal of the appeal.