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2023 (2) TMI 246 - AT - Income TaxDelayed Employees contribution to the Employees Provident Fund (EPF) and the Employees State Insurance Scheme (ESI) - Disallowance u/s 43B or u/s 36(1)(va) - amount claimed on payment of PF and ESI if deposited on or before due date of filing of return - HELD THAT - As decided in PRO INTERACTIVE SERVICE (INDIA) PVT. LTD. 2018 (9) TMI 2009 - DELHI HIGH COURT and AIMIL LIMITED 2009 (12) TMI 38 - DELHI HIGH COURT Hon ble Courts have allowed the employees contributions qua PF and ESI as expenditure on actual payment, may be made after the due date as prescribed in the relevant Acts, but before the due date of filing of return of income u/s.139(1) of the Act and also not drawn any distinction between the employee s and employer s share qua PF ESI contributions, hence, the conclusion drawn by the ld. Commissioner in directing the Assessing Officer to allow deduction if the payments are found made before due date of filing the return, do not require any interference as the impugned order does not suffers from any perversity, impropriety and/or illegality, consequently issue raised by the Revenue Department is not tenable - Appeal filed by the Revenue is dismissed.
Issues involved:
Revenue Department's appeal against the order of the Commissioner of Income-tax regarding disallowance of employees' contributions to PF and ESI made after the due date but before the due date of filing the return of income. Detailed Analysis: Issue 1: Disallowance of employees' contributions to PF and ESI The Revenue Department appealed against the order of the Commissioner of Income-tax, challenging the disallowance of employees' contributions to Provident Fund (PF) and Employees State Insurance (ESI) made after the due date but before the due date of filing the return of income. The Assessee had deposited the contributions after the prescribed due date, resulting in an addition by the Assessing Officer. The Commissioner directed the Assessing Officer to verify the actual payment dates and allow the deductions if payments were made before the due date of filing the return. The main question before the Tribunal was whether the Assessee is entitled to deduction under section 36(1)(va) of the Income-tax Act if the contributions were deposited after the statutory due dates but before the due date of filing the return. Issue 2: Legal precedent and interpretation The Tribunal considered various legal precedents, including judgments by the Hon'ble Apex Court, Punjab and Haryana High Court, and the jurisdictional High Court. These judgments established that if the employees' contributions to PF and ESI were deposited before the due date of filing the return of income, they cannot be disallowed under section 43B or section 36(1)(va) of the Act. The courts emphasized that the legislative intent was to allow the deductions on actual payment, even if made after the statutory due dates. The Tribunal noted that the courts did not differentiate between the employee's and employer's share of contributions to PF and ESI, further supporting the Assessee's claim for deduction. Issue 3: Tribunal's decision After considering the arguments presented by the Revenue Department and the Assessee, the Tribunal dismissed the Revenue Department's appeal. The Tribunal upheld the Commissioner's order directing the Assessing Officer to allow the deductions if the payments were made before the due date of filing the return. The Tribunal concluded that the impugned order did not suffer from any perversity, impropriety, or illegality, and therefore, the issue raised by the Revenue Department was not tenable. The Tribunal's decision was based on the legal precedents and the interpretation of the relevant provisions of the Income-tax Act. In conclusion, the Tribunal's decision in this case reaffirmed the principle that employees' contributions to PF and ESI, if deposited before the due date of filing the return of income, are allowable deductions under the Income-tax Act. The detailed analysis of legal precedents and the interpretation of relevant provisions supported the Tribunal's decision to dismiss the Revenue Department's appeal.
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