2024 (3) TMI 1400 - AT - Income Tax

Late payment of employees contribution to PF ESI - intimation u/s 143(1) - amount of Employees Contribution to PF ESI paid by the assessee before the due date as prescribed u/s 139(1) cannot be allowed as a deduction u/s 43B - HELD THAT - We find the issue now stands decided against the assessee by the decision of Checkmate Services (P) Ltd 2022 (10) TMI 617 - SUPREME COURT wherein as held that if the Employees contribution to PF ESI are not deposited before the statutory due dates mentioned in the respective Act, the same cannot be allowed as a deduction. Since admittedly, the assessee, in the instant case, has not deposited the Employees Contribution to PF ESI before the statutory due dates but has deposited the same before the due date prescribed u/s 139(1) for filing of the return of income, therefore, the learned CIT (A) NFAC was fully justified in upholding the addition/disallowance made by the CPC in the intimation u/s 143(1). Decided against assessee.

Summary

The appeal before the ITAT Hyderabad, involving the assessee's challenge against the CIT (A) Bengaluru's order, concerns the disallowance of Rs. 1,85,76,482/- for delayed remittance of employees' contributions to PF and ESI under Section 143(1) of the Income Tax Act. The assessee argued that payments were made before the due date under Section 139(1) for filing returns, thus no disallowance should occur. However, the CIT (A) held that such contributions, deemed as income under Section 2(24)(x), were not deductible under Section 36(1)(va) as they were not deposited within the statutory due dates specified by the respective Acts.

The Tribunal referenced the Supreme Court's decision in Checkmate Services (P) Ltd vs. CIT, which dictates that contributions not deposited by statutory due dates are not deductible, even if paid before the return filing deadline under Section 139(1). Consequently, the Tribunal upheld the CIT (A)'s decision, dismissing the assessee's appeal. The judgment was pronounced on 13th March, 2024.