2012 (11) TMI 751 - AT - Income Tax

Employees Provident Fund and ESIC - alleged that the Employees Contribution towards Provident Fund and E.S.I.C. had been paid late after the due date by the assessee Held that - Contribution towards PF and ESIC having been paid by the assessee within 2 to 4 days after grace period provided under s.43B but before filing the return is allowed - against the Revenue

Summary

Issues:
1. Disallowance of employees' contribution to P.F. and E.S.I.C. under section 43B for minor delay in depositing the contribution.
2. Applicability of section 43B and the second proviso in the case of employees' contribution.

Analysis:
1. The appeal concerned the disallowance of Rs.145572 towards employees' contribution to P.F. and Rs.2111 towards E.S.I.C. under section 43B due to minor delays in depositing the contributions. The Assessing Officer noted the late payments based on audit reports submitted by the assessee. The appellant argued that the contributions were paid before the due date of filing the return of income, citing a Supreme Court decision. However, the Assessing Officer disallowed the sum and initiated penalty proceedings for furnishing inaccurate particulars of income.

2. The matter was taken to the first appellate authority, where the appellant cited the case of CIT vs. Alom Extrusions Ltd. The CIT(Appeals) upheld the disallowance, stating that section 43B(b) applies to employers' contributions, while employees' contributions are governed by Sec.36(1)(va). The appellant's reliance on case laws was deemed unhelpful, and the delay in payment was considered for upholding the disallowance.

3. During the proceedings, the appellant presented several decisions to support their case, while the Revenue relied on a judgment from Kolkata. The ITAT considered the dates of payment and referred to the Supreme Court's decision in Alom Extrusions Ltd. The retrospective application of the second proviso to section 43B was highlighted, emphasizing the curative nature of the amendment. The ITAT noted that the issue was resolved by the Supreme Court and reversed the findings of the lower authorities, directing to allow the claim.

4. The ITAT observed that various Co-ordinate Benches were following the decision in Alom Extrusions Ltd., ensuring consistency in allowing such claims. Consequently, the ITAT allowed the appeal of the Assessee, overturning the disallowance of employees' contribution to P.F. and E.S.I.C. under section 43B due to minor delays in depositing the contributions.