2018 (9) TMI 1999 - AT - Income Tax

Employee s contribution on ESI PF - Sum not paid by the assessee as an employer within the due date of PF Act - HELD THAT - As assessee failed to remit the PF ESI within the due date under PF Act but the assessee had remitted the same within the due date of filing of the return of income. There is no dispute about the above said contention. As perused the ratio laid down in the case of CIT vs. Industrial Security Intelligence India Pvt. Ltd. 2015 (7) TMI 1063 - MADRAS HIGH COURT wherein, it was held that there could be no deemed addition u/s.36(1)(va) r.w.s.2(24)(x) of the Act if the impound amount paid before the due date of the filing of the return. - Decided in favour of assessee.

Summary

Issues:
Appeal against deletion of addition on employee's contribution to ESI & PF.

Analysis:
The Revenue appealed against the deletion of an addition made on employee's contribution to ESI & PF. The Revenue contended that the contributions were not paid by the assessee within the due date of the PF Act. The AO treated the delayed payments as the income of the assessee and brought them to tax. The assessee challenged this disallowance before the Ld. CIT(A), who, after considering submissions and case laws, deleted the additions. The Revenue then appealed to the Tribunal, arguing that the contributions are governed by Sec.36(1)(va) u/s.43B of the Act. The Counsel for the assessee cited a decision of the Hon'ble Jurisdictional High Court and argued that the assessee is eligible to claim u/s.36(1)(va) to avail the benefit u/s.43B. The Tribunal noted that the assessee remitted the amounts within the due date of filing the return of income, following the decision of the Hon'ble Jurisdictional High Court. Therefore, the Tribunal upheld the Ld. CIT(A)'s decision to delete the addition, dismissing the Revenue's appeal.

The key point of contention was the timing of remittance of employee's contributions to ESI & PF by the assessee. The AO treated the delayed payments as income of the assessee, leading to the disallowance. However, the Ld. CIT(A) relied on a decision of the Hon'ble Jurisdictional High Court, stating that if the amount is paid before the due date of filing the return, there should be no deemed addition u/s.36(1)(va) r.w.s.2(24)(x) of the Act. The Tribunal agreed with this interpretation, emphasizing that the assessee remitted the amounts within the due date of filing the return, thereby dismissing the Revenue's appeal.

The Tribunal's decision was based on the assessee's timely remittance of the contributions within the due date of filing the return of income. Citing the decision of the Hon'ble Jurisdictional High Court, the Tribunal held that no deemed addition should apply if the amount is paid before the return filing due date. This interpretation aligned with previous cases and led to the dismissal of the Revenue's appeal. The Tribunal upheld the Ld. CIT(A)'s deletion of the addition, emphasizing compliance with the due date for filing the return as a crucial factor in determining the tax treatment of employee's contributions to ESI & PF.