2018 (6) TMI 219 - AT - Income Tax

Employees contribution to PF & ESI beyond the prescribed time limit provided in respective Act - Held that - This issue is now covered by the decision of CIT vs. State bank of Bikaner & Jaipur 2014 (5) TMI 222 - RAJASTHAN HIGH COURT as well as the decision in case of CIT Jaipur Vidyut Vitran Nigam Ltd. 2014 (1) TMI 1085 - RAJASTHAN HIGH COURT as held where Contribution were paid by the assessee before filing of the return and proof of payment was submitted before the Assessing Officer, the amounts were deductible as deduction - Decided in favour of assessee.

Summary

Issues:
1. Disallowance of employee's contribution to PF & ESI by AO.
2. Interpretation of sections 43B and 36(1)(va) of the IT Act.
3. Applicability of judicial precedents on employee contribution.

Issue 1: Disallowance of employee's contribution to PF & ESI by AO:
The appeals by the Revenue challenged the deletion of addition made by the AO for depositing employee's contribution to PF & ESI beyond the prescribed time limit. The common issue in both appeals was the disallowance made by the AO in this regard. The ld. CIT(A) deleted this disallowance, leading to the Revenue's appeal.

Issue 2: Interpretation of sections 43B and 36(1)(va) of the IT Act:
The primary contention revolved around whether employee's contribution to PF & ESI should be governed by section 43B or section 36(1)(va) read with section 2(24)(x) of the IT Act. The ld. CIT(A) held that the contributions were governed by section 43B, which led to the deletion of the disallowance made by the AO.

Issue 3: Applicability of judicial precedents on employee contribution:
The decision of the Hon'ble jurisdiction High Court in the case of CIT vs. State bank of Bikaner & Jaipur was crucial in determining the outcome of the appeals. The ld. CIT(A) relied on this precedent, along with other judicial decisions, to support the appellant's claim that the employee's contribution to PF & ESI, if paid before the due date of filing the return of income, should be allowed as a deduction. Various judicial decisions, including those of the Hon'ble Supreme Court and the Hon'ble Delhi High Court, were cited to establish the deductibility of such payments made before the due date.

In conclusion, the appeals filed by the Revenue were dismissed, upholding the decision of the ld. CIT(A) based on the interpretation of relevant legal provisions and judicial precedents. The order pronounced on 23/02/2018 emphasized the importance of timely payment of employee contributions to PF & ESI before the due date of filing the return of income to qualify for deduction, as established by various court decisions.