2022 (1) TMI 1146 - AT - Income Tax

Contribution for belated payment of employees share of PF ESIC i.e. after due date specified in respective Act and treated the income of the assessee as per section 2(24)(X) - HELD THAT - Where there is a delay in deposit of employees contribution to PF/ESIC as per the due date prescribed under the provisions of PF/ESIC but the contribution is deposited before the due date of filing of return of income. No disallowance is called for u/s 36(1)(va) of the Act as held by this Tribunal in the case of M/s Industrial Filters and Fabrics Pvt. Ltd. 2018 (9) TMI 1008 - ITAT INDORE We, accordingly set aside the finding of Ld. CIT(A) and delete the disallowance of employees contribution to PF/ESIC and employees contribution to PF and ESIC - Decided in favour of assessee.

Summary

Issues:
- Disallowance of contribution for belated payment of employees' share of PF & ESIC
- Direction to verify the claim of employer's contribution
- Applicability of section 36(1)(va) of the Income Tax Act

Issue 1: Disallowance of contribution for belated payment of employees' share of PF & ESIC

The appeal was against the order of the Ld. Commissioner of Income Tax (Appeals) regarding the disallowance of ?1,54,463 on account of the belated payment of employees' share of PF & ESIC. The disallowance was made by the Central Processing Centre for delay in depositing the sum before the due date specified by the authorities regulating PF/ESIC. However, it was found that the total sum had been deposited with the concerned authority before the due date of filing the return of income. The Tribunal noted that no disallowance was justified as the contribution was deposited before the due date of filing the return, as per section 36(1)(va) of the Act. Citing a previous judgment, the Tribunal ruled in favor of the assessee and deleted the disallowance.

Issue 2: Direction to verify the claim of employer's contribution

The Ld. CIT(A) had directed the Ld. AO to verify the claim of the appellant regarding the employer's contribution of ?2,01,472. The Tribunal found this direction to be beyond the jurisdictional powers conferred to the Ld. CIT(A) and ruled that no disallowance was warranted as the total contribution by the employer and employee had been deposited before the due date of filing the return of income. The Tribunal set aside the finding of the Ld. CIT(A) and deleted the disallowance of the employees' and employer's contributions.

Issue 3: Applicability of section 36(1)(va) of the Income Tax Act

The Tribunal emphasized that under the given facts and circumstances, where there was a delay in depositing the employees' contribution to PF/ESIC as per the due date prescribed, but the contribution was deposited before the due date of filing the return of income, no disallowance was warranted under section 36(1)(va) of the Act. The Tribunal referred to a relevant judgment and held that the issue raised in the appeal was squarely covered by the decision of the Tribunal. Consequently, the Tribunal allowed the appeal of the assessee and deleted the disallowance of the contributions.

In conclusion, the Tribunal ruled in favor of the assessee, holding that the disallowance of the contributions for belated payment and the direction to verify the employer's contribution were not justified. The Tribunal emphasized the importance of timely deposit of contributions and adherence to the due dates specified by the authorities regulating PF/ESIC.