2009 (11) TMI 56 - HC - Income Tax

Contribution of PF, EPF, EC Non deposit of amount by due date - ITAT deleted the addition of Rs.69,10,329/- and Rs.69,89,302/- made by the Assessing Officer, inter alia, on account of employees contribution to PF & EC - The assessee claimed deduction in respect of payment of contribution towards provident fund, which was disallowed on the ground that payment was beyond the stipulated date. The CIT (A) upheld that claim of the assessee by referring to explanation to Section 43B, read with Explanation to Section 36(1)(va) and Section 2(24)(x) of the Act with further observation that the payment was within the due date, as per circular issued under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. This view has been upheld by the Tribunal held that - View of the Tribunal is consistent with the view of judgment of Gauhati High Court in Commissioner of Income Tax v. George Williamson (Assam) Ltdagainst which SLP was dismissed and which was followed in judgment of Delhi High Court in Commissioner of Income Tax v. Dharmendra Sharma. with which we respectfully agree. No substantial question of law arises. The appeal is dismissed. Decided in favor of assessee

Summary

Issues:
1. Deduction of payment towards provident fund contribution made beyond due date.
2. Allowability of deduction for employer's contribution to provident fund, EPF, and EPF made beyond prescribed due dates.

Analysis:
1. The appeal was filed by the revenue against the order of the Income Tax Appellate Tribunal (ITAT) regarding the deduction of payment towards provident fund contribution made beyond the due date for the assessment year 2003-04. The revenue contended that the payments were not allowable under Section 36(va) of the Income Tax Act as they were made beyond the due dates. The CIT (A) and the Tribunal upheld the claim of the assessee, stating that the payments were within the due date as per the circular issued under the Employees Provident Funds and Miscellaneous Provisions Act, 1952.

2. The Tribunal observed that all the payments were made within the grace period allowed under the PF Act, and hence, no interference was necessary in the order of the CIT (A). The Tribunal relied on the judgment of the Madras High Court in the case of CIT v. Selan Spg. Mills Ltd., where it was held that PF contributions paid within the grace period are deductible. The revenue argued that there was no power to condone the delay, citing a judgment of the Orissa High Court. However, the High Court dismissed this argument, stating that it was not a case of condonation of delay but of considering the payments made to meet the accrued liability, in line with Section 43B of the Act.

3. The High Court further referenced the judgment of the Gauhati High Court in Commissioner of Income Tax v. George Williamson (Assam) Ltd., which was followed by the Delhi High Court in Commissioner of Income Tax v. Dharmendra Sharma. The High Court agreed with these judgments and concluded that no substantial question of law arose in the present case. Therefore, the appeal was dismissed, affirming the decision of the Tribunal in allowing the deduction for provident fund contributions made within the grace period.

This detailed analysis of the judgment highlights the issues raised, the arguments presented, and the legal reasoning behind the decision of the High Court in dismissing the appeal.