2019 (7) TMI 1092 - HC - Income Tax

Employee's contribution to PF and ESI funds beyond the due dates - Addition u/s 36(va) read with Section 2(24)(x) - HELD THAT - A Division Bench of the Kerala High Court in the case of CIT Vs. M/s.Merchem Lt 2015 (9) TMI 560 - KERALA HIGH COURT held in favour of the Revenue. Similarly, another Division Bench of the Kerala High Court in the case of Popular Vehicles Services Private Limited Vs. CIT, Ernakulam 2018 (8) TMI 133 - KERALA HIGH COURT has recently taken note of all the earlier decisions including the decisions, which have been referred to by the Tribunal and the CIT(A) and held in favour of the Revenue. Judgment of Division Bench of this Court in KERALA STATE WAREHOUSING CORPORATION VERSUS CIT, 2009 (12) TMI 1010 - KERALA HIGH COURT , allowing an appeal filed by the assessee on the same subject matter. In the said judgment, this Court had followed the decision in CIT VERSUS VINAY CEMENT LTD. 2007 (3) TMI 346 - SC ORDER . Both the judgments mentioned are concerned with the law as it stood prior to the amendment of Section 43B.

Summary

Issues:
1. Whether delayed payments of employees' contribution to the Employees Provident Fund Account are allowable deductions under section 36(1)(Va) of the Income Tax Act, 1961.

Analysis:

Issue 1:
The main question raised in the Income Tax Appeal was whether delayed payments of employees' contribution to the Employees Provident Fund Account could be considered as an allowable deduction under section 36(1)(Va) of the Income Tax Act, 1961. The court noted that previous rulings, such as Commissioner of Income Tax V. Merchem Limited, CIT V. Appollo Tyres Ltd., and Popular Vehicles and Services Pvt. Ltd V. Commissioner of Income Tax, had decided against the appellant/assessee in favor of the Department/Revenue. Additionally, the court mentioned a recent decision related to M/s.Harrisons Malayalam Ltd. The appellant's counsel referred to a judgment by another Division Bench of the Court from 2009, which allowed an appeal on the same subject matter. However, the court highlighted that the earlier decisions were based on the law before the amendment of Section 43B of the Income Tax Act, 1961, and were not applicable to the current dispute. Consequently, the court concluded that interference with the Tribunal's order was not justified, leading to the dismissal of the appeal.

This detailed analysis of the judgment in the Kerala High Court provides a comprehensive overview of the issues involved, the legal arguments presented, and the court's decision based on relevant precedents and legal provisions.