2022 (7) TMI 109 - AT - Income Tax

Delayed payment of employees contribution to the provident fund disallowable u/s 36 (1) (va) - HELD THAT - The facts in the case clearly shows that the employee share of provident fund contribution for the month of may 2017 was remitted to the provident fund authority on 16/6/2017. The due date of remittance of the provident for the month of May 2017 earlier was up to 15/6/2017 however the same was extended by a date and the due date under the respective provident fund law was extended up to 16/6/2017. This evidence is available at page number seven 11 of the paper book which says that the last date for remittance for the due month of may 2017 is payable by 15/6/2017 is extended by one day i.e. extended up to 16/06/2017. Thereby it is apparent that when the assessee has deposited the above sum within that extended due date i.e. 16/6/2017 without going into the controversy whether the amendment made by the finance act 2021 is applicable retrospective or not there is no delay in deposit of the employee s contribution. In nutshell the employee s contribution has been deposited by the assessee within the due date prescribed under the respective provident fund laws. Thus adjustment made by the Central processing centre is also not in accordance with the law. Assessee appeal allowed.

Summary

Issues:
Appeal against disallowance of employees' contribution to provident fund made by Central processing Centre (CPC) under Section 36(1)(va) of the Income Tax Act, 1961 for assessment year 2018-19.

Detailed Analysis:

1. Grounds of Appeal:
The assessee appealed against the order passed by the National Faceless Appeal Centre (NFAC) confirming the disallowance of employees' contribution to provident fund. The grounds of appeal included challenging the adjustment made by the assessing officer under Section 143(1) of the act, citing the prospective nature of the amendment to provisions of Section 36(1)(va) and Section 43B(b) in the Finance Act 2021. The appellant argued that the adjustment related to a debatable issue and should not have been confirmed by the CIT-A.

2. Facts and Processing of Return:
The assessee, a public limited company, filed its return of income for the assessment year 2018-19, which was processed under Section 143(1) of the act. The adjustment disallowing employees' contribution to the provident fund was made by the CPC, citing a delay in payment. The appellant revised its return, but the disallowance was upheld by the NFAC based on the audit report and relevant legal provisions.

3. Arguments and References:
The authorized representative of the assessee presented a paper book containing judicial decisions supporting the contention that if the employees' share of provident fund contribution is made before the due date of filing the return of income, no disallowance should occur. The departmental representative, on the other hand, supported the orders of the CIT-A and argued that the amendment in the Finance Act 2021 applied retrospectively.

4. Judgment and Analysis:
The Tribunal carefully considered the contentions and evidence presented. It noted that the employee's contribution to the provident fund was remitted within the extended due date as per the provident fund laws. Therefore, the adjustment made by the CPC was deemed incorrect as there was no delay in depositing the contribution. The Tribunal allowed the appeal, emphasizing that no disallowance could be made in the hands of the assessee.

5. Conclusion:
In conclusion, the Tribunal allowed the appeal filed by the assessee, overturning the disallowance of employees' contribution to the provident fund. The judgment highlighted the importance of adhering to due dates prescribed under relevant laws and emphasized that adjustments must align with legal requirements.