2021 (6) TMI 545 - AT - Income Tax

Addition u/s 43B - Belated payment of employee s contribution to PF and ESI - Whether CIT(A) failed to consider that the employees contribution to EPF and ESI as duly paid before the due date of filing the return of income and thereby erred in disallowing the same? - HELD THAT - Following the decisions of CAF D LAKE PRIVATE LIMITED 2021 (2) TMI 634 - ITAT HYDERABAD on the earlier occasion had held that the provisions of section 43B of the Act can be invoked on the assessee if the employee s contribution towards EPF ESI deducted from the employee s salary by the assessee is not remitted in the Government Treasury within the due date specified under the EPF ESI Act. No hesitation to uphold the order of the Ld. CIT (A) as well as the Order of the Ld. AO on the issue. - Appeal of the assessee is dismissed.

Summary

Issues:
1. Disallowance of employee's contribution to PF and ESI.
2. Interpretation of Section 36(1)(va) and Section 43B of the Income Tax Act.
3. Applicability of provisions regarding remittance of employee's contribution to EPF and ESI.

Analysis:

Issue 1: Disallowance of employee's contribution to PF and ESI
The appeal was filed against the Ld. CIT(A)'s order confirming the addition made for belated payment of employee's contribution to PF and ESI. The Ld. CIT(A) upheld the addition, stating it was in accordance with the provisions of the Act. The Tribunal reviewed the arguments presented by both parties and referred to a previous order where a similar addition was confirmed. The Tribunal found merit in the Ld. CIT(A)'s order and dismissed the appeal, confirming the decision of the Revenue Authorities.

Issue 2: Interpretation of Section 36(1)(va) and Section 43B
Section 36(1)(va) of the Act allows deduction if the employee's contribution to PF/ESI is remitted within the due date specified in the relevant Act. On the other hand, Section 43B pertains to the employer's contribution and allows deduction if remitted before the due date of filing the return of income. The Tribunal emphasized that Section 43B does not apply to employee's contribution and does not override Section 36(1)(va). The Tribunal cited relevant case laws and highlighted the distinction between employee's and employer's contributions.

Issue 3: Applicability of provisions regarding remittance of employee's contribution
The Tribunal reiterated that employee's contribution to PF/ESI must be remitted within the due date specified in the relevant Acts to qualify for deduction. Citing judgments from various High Courts, the Tribunal emphasized the importance of timely remittance of employee's contributions. The Tribunal upheld the Ld. CIT(A)'s order based on the interpretation of relevant provisions and case laws, confirming the disallowance of the addition made by the Ld. AO.

In conclusion, the Tribunal dismissed the appeal, affirming the decisions of the Revenue Authorities. The Tribunal's detailed analysis clarified the interpretation of Section 36(1)(va) and Section 43B, emphasizing the significance of timely remittance of employee's contributions to PF and ESI as per the provisions of the Act.