9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2025 (4) TMI 840 - AT - Income TaxAddition of delayed deposit of PF and ESIC towards employees contribution u/s. 36(1)(va) - HELD THAT - It is observed that the assessee has challenged the addition/disallowance made by the ld. A.O. and upheld by the ld. CIT(A) on the delayed payment of PF and ESIC towards employees contribution. As this issue is no longer res integra and stands squarely covered by the decision in the case of Checkmate Services Pvt. Ltd. 2022 (10) TMI 617 - SUPREME COURT wherein it was held that the employees contribution deducted by the assessee u/s. 36(1)(va) of the Act is an allowable deduction only when the same is deposited by the employer on or before the due date specified under the relevant Acts and the same would amount to the employer s income u/s.2(24)(x) of the Act if the same is not deposited in the relevant statutory funds. The same is binding on all courts as per Article 141 of Constitution of India and therefore we decline to interfere with the same. Payment of the same within 15 days from the close of the month whether pertains to the actual disbursement of the wages or the month in which the salary was due - The assessee has relied on various decisions of the Tribunal to substantiate that 15 days from the close of the month should be interpreted as the month during which disbursement of salary is actually made should be reckoned for the purpose of determination of due date of deposits under the relevant Acts and not the month when the salary was due to the employees. As observed in the case of CIT vs. Madras Radiators Pressing Ltd. 2002 (12) TMI 36 - MADRAS HIGH COURT has held that the term every month in clause 38 of the Provident Fund Scheme should be read as month in which the wages were actually earned i.e. the salary payable and not when the salary was paid . It further reiterates that the responsibility of the employer to make the payment towards the employer s contribution irrespective of the facts that whether the wages are paid in time or not. Decided against assessee.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment involve the interpretation and application of the provisions under the Income Tax Act, 1961, specifically concerning the disallowance of deductions related to delayed deposits of employees' contributions to Provident Fund (PF) and Employees' State Insurance Corporation (ESIC). The issues include:
ISSUE-WISE DETAILED ANALYSIS 1. Disallowance of Deductions for Delayed Deposits Relevant Legal Framework and Precedents: The primary legal provisions involved are Section 36(1)(va) and Section 43B of the Income Tax Act, 1961. The judgment of the Supreme Court in Checkmate Services Pvt. Ltd. vs. CIT serves as a critical precedent, establishing that employees' contributions must be deposited by the due date specified under the relevant Acts. Court's Interpretation and Reasoning: The Tribunal upheld the disallowance, emphasizing the binding nature of the Supreme Court's decision, which mandates that deductions for employees' contributions are only permissible if deposited by the due date, failing which it is considered the employer's income under Section 2(24)(x). Key Evidence and Findings: The assessee failed to deposit the contributions within the stipulated time frame, leading to disallowance. Application of Law to Facts: The Tribunal applied the Supreme Court's ruling to affirm the disallowance, citing the binding nature of Article 141 of the Constitution. Treatment of Competing Arguments: The assessee's reliance on various Tribunal decisions and interpretations favoring a broader interpretation of "due date" was considered but ultimately rejected in light of the Supreme Court's clear mandate. Conclusions: The Tribunal concluded that the disallowance was justified, given the statutory requirements and the Supreme Court's precedent. 2. Interpretation of "Due Date" for Deposits Relevant Legal Framework and Precedents: The interpretation of the term "month" in Clause 38 of the Employees' Provident Fund Scheme, 1952, was central to this issue. The Tribunal considered various judgments, including those of the Madras High Court and other Tribunal benches. Court's Interpretation and Reasoning: The Tribunal adhered to the view that the "month" refers to the month for which wages are due, not when they are paid, aligning with the Madras High Court's interpretation. Key Evidence and Findings: The Tribunal found no ambiguity in the statutory language, affirming the employer's responsibility to deposit contributions based on the month wages are due. Application of Law to Facts: The Tribunal applied the established interpretation, rejecting the assessee's argument for a liberal approach that would favor the timing of actual wage disbursement. Treatment of Competing Arguments: The Tribunal acknowledged the assessee's arguments and cited cases but maintained the prevailing legal interpretation as controlling. Conclusions: The Tribunal concluded that the due date is tied to the wage period, not the disbursement period, thereby supporting the disallowance. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning: The Tribunal quoted the Supreme Court's decision in Checkmate Services Pvt. Ltd., emphasizing that "the employees' contribution deducted by the assessee u/s. 36(1)(va) of the Act is an allowable deduction only when the same is deposited by the employer on or before the due date specified under the relevant Acts." Core Principles Established: The judgment reinforced the principle that statutory deadlines for contributions are binding and that the Supreme Court's interpretations are authoritative and must be followed. Final Determinations on Each Issue: The Tribunal dismissed the appeal, affirming the disallowance of deductions for delayed deposits of employees' contributions to PF and ESIC, based on statutory requirements and judicial precedents.
|
