2019 (7) TMI 1877 - AT - Income Tax

Addition u/s 2(24)(x) r.w.s. 36(1)(va) - delayed employees contribution to provident fund - Contribution received from the employees paid before due date of filing of the return - HELD THAT - As decided in M/S. EASTERN POWER DISTRIBUTION COMPANY OF A.P. LTD. AND VICA-VERSA 2016 (9) TMI 1040 - ITAT VISAKHAPATNAM we are of the view that 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. We do not see any reasons to interfere with the order of the CIT(A). Hence we inclined to uphold the CIT(A) order and dismiss the appeal filed by the revenue.

Summary

Issues Involved:
Whether the contribution received from employees paid before the due date of filing the return is allowable or not.

Detailed Analysis:

Issue 1: Contribution Received from Employees

The case involved an individual deriving income from labor contracts, who filed a return of income declaring a total income. The Assessing Officer disallowed the employee's contribution to ESI & EPF as it was remitted belatedly, treating it as deemed income under section 2(24)(x) r.w.s. 36(1)(va) of the Act. The appellant contended that the contribution was paid before the due date of filing the return. The CIT(A) dismissed the appeal, citing judicial precedents. The appellant argued that the issue was covered by a decision of the tribunal in another case. The Departmental Representative relied on the orders of the authorities below.

Issue 2: Judicial Precedents

The ITAT, Visakhapatnam Bench referred to the decision in the case of M/s. Eastern Power Distribution Company of A.P. Ltd., where it was held that deductions for employees' contribution to PF should be allowed if paid before the due date of filing the income tax return u/s 139(1) of the Act. The tribunal analyzed the provisions of section 36(1)(va) and section 43B(b) of the Act, emphasizing that there is no distinction between employees' and employer's contribution to PF. Various judicial decisions were cited to support the view that if the total contribution is deposited before the due date of filing the return, no disallowance can be made.

Decision:

Respecting the decision of the tribunal in the case of M/s. Eastern Power Distribution Company Ltd., the order passed by the CIT(A) was set aside, directing the Assessing Officer to allow the claim of the assessee. The appeal filed by the assessee was allowed. The tribunal upheld the CIT(A) order, concluding that there is no difference between employees' and employer's contribution to PF, and if the total contribution is deposited before the due date of filing the return, no disallowance can be made towards employees' contribution to the provident fund.

This detailed analysis highlights the key legal arguments, interpretations of relevant provisions, and the final decision of the tribunal based on judicial precedents and statutory provisions.