2019 (4) TMI 689 - AT - Income Tax

Addition u/s 43B - delay in remitting the employees contribution to Provident Fund (PF) accounts - assessee remitted the employees contribution beyond the due date specified u/s 36(1)(v) - HELD THAT -As decided in M/S. EASTERN POWER DISTRIBUTION COMPANY OF A.P. LTD. AND VICA-VERSA 2017 (9) TMI 1803 - ITAT VISAKHAPATNAM the employees contribution to PF required to be allowed even if the same is paid before the due date of filing the return u/s 139(1) of the Act. The Tribunal has followed the decision of ESSAE TERAOKA PVT LTD VERSUS DEPUTY COMMISSIONER OF INCOME-TAX 2014 (3) TMI 386 - KARNATAKA HIGH COURT and TETRA SOFT (INDIA) PVT. LTD. 2015 (10) TMI 1601 - ITAT HYDERABAD while delivering the above ruling. Therefore, we decided issue in favour of assessee.

Summary

Issues:
Appeal by revenue against CIT(A) order, Addition made for delay in remitting PF and ESI contributions, CIT(A) deletion of addition, Tribunal's consistent view on employees' contributions to PF and ESI, Cross objections by assessee.

Analysis:
The appeal before the ITAT Visakhapatnam involved the revenue challenging the CIT(A) order regarding the addition made for the delay in remitting employees' contributions to Provident Fund (PF) and Employee State Insurance (ESI). The Assessing Officer disallowed ?86,075 as income under section 36(1)(v) read with section 2(24)(x) of the Income Tax Act, 1961 due to the delayed remittance of PF and ESI by the assessee. The CIT(A) deleted this addition, citing precedents from the Tribunal's orders in similar cases. The CIT(A) referred to the Tribunal's decision in the case of Eastern Power Distribution Company of AP Ltd. and held in favor of the assessee, following the principle that if the total contribution is deposited before the due date of filing the return, no disallowance can be made. The Tribunal upheld the CIT(A) order, emphasizing the importance of timely remittance of contributions.

The Tribunal consistently followed the decisions of the Hon'ble Karnataka High Court and ITAT, Hyderabad in similar cases, supporting the view that employees' contributions to PF and ESI should be allowed as deductions if paid before the due date of filing the return. The Tribunal's ruling in this case aligned with its previous decisions and upheld the CIT(A)'s order, dismissing the revenue's appeal. The Tribunal's stance was further reinforced by its previous ruling in a similar case dated 25th January 2019. As a result, the appeal by the revenue and the cross objections by the assessee were both dismissed. The consistent approach of the Tribunal in interpreting the provisions related to employees' contributions to PF and ESI was a significant factor in the decision-making process, ensuring uniformity in treatment across cases.