2018 (10) TMI 1696 - HC - Income Tax

Disallowance of deduction u/s.36(1)(va) r.w.s. 2(24)(x) - Employees contribution to PF and ESI - failure to deposit before due date - Revenue did not permit deduction of such sum from the income of the assessee - HELD THAT - As assessee did deposit such amount of contribution towards PF ESIC accounts however missed the deadline prescribed in the statutes for such purpose. On account of this the Revenue did not permit deduction of such sum from the income of the assessee. Such disallowance thereupon became the subject matter of appeal before the Tribunal. The Tribunal dismissed the ground relying upon the judgment of this Court in the case of Commissioner of Income-tax vs. Gujarat State Road Transport Corporation Limited reported 2014 (1) TMI 502 - GUJARAT HIGH COURT The question of law proposed in the present appeal is squarely covered by the aforesaid order passed by this Court. In such circumstances referred to above this appeal at this stage is dismissed. However if the Supreme Court reverses the judgement in the case of CIT vs. GSRTC (Supra) it would be open for the appellant to revive this appeal by filing an application for such purpose within three months from the date of the judgement. - Decided against assessee.

Summary

Issues:
Challenge to judgment of Income Tax Appellate Tribunal regarding deductibility of employees' contribution towards Provident Fund, ESI, etc. for Assessment Year 2014-15.

Analysis:
The High Court heard an appeal challenging the Income Tax Appellate Tribunal's decision on the deductibility of a sum of &8377; 15,82,265, being the employees' contribution towards Provident Fund and ESI for the Assessment Year 2014-15. The assessee missed the deadline for depositing the contribution, leading the Revenue to disallow the deduction. The Tribunal upheld this decision, citing a previous judgment of the High Court. The appellant's counsel acknowledged the precedent but highlighted a pending appeal before the Supreme Court against the High Court's judgment in a similar case. Considering the cost implications for the assessee to pursue the matter further, the counsel proposed that the benefit of the Supreme Court's judgment, if favorable, should apply to the present case as well.

The Court deliberated on two options to ensure the appellant could benefit from the Supreme Court's judgment if it reversed the High Court's decision. The first option was to dismiss the current appeal, allowing the assessee to approach the Supreme Court separately. The second option involved providing a mechanism for the assessee to claim the benefit without filing a new appeal. Given the relatively small disputed amount, the Court opted for the latter approach. The Court dismissed the appeal at the current stage but allowed the appellant to revive it within three months of a favorable Supreme Court judgment in the related case. This decision aimed to balance the assessee's interests with procedural efficiency, ensuring access to potential benefits without unnecessary costs.

In conclusion, the High Court's judgment addressed the issue of deductibility of employees' contributions towards Provident Fund and ESI, balancing legal precedents with practical considerations for the appellant. The Court's decision provided a pragmatic approach to safeguard the assessee's interests while awaiting a potential favorable outcome from the Supreme Court, offering a procedural pathway to benefit from future developments in related cases.