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2017 (10) TMI 175 - AT - Income TaxDelayed payment in respect of employees contribution by the assessee of Provident Fund and ESIC - Payment not made on due date but made before the due date of filing return u/s 139(1) - addition u/s 36(1)(vi) - Held that - Hon ble jurisdictional Delhi High Court in the case of CIT Vs. AIMIL Ltd. (2009 (12) TMI 38 - DELHI HIGH COURT) has considered the employee s contribution deposited after due dates prescribed under the relevant acts, and allowed the benefit of the deduction to such contribution, if paid before the return is filed. We find that the Hon ble jurisdictional High Court above has allowed deduction of payment of employee s contribution before the due date of filing of return of income after considering the decision of the Hon ble Supreme Court in the case of CIT Vs. Vinay Cement Limited (2007 (3) TMI 346 - Supreme Court of India ). In the instant case, identical issue in dispute is before us. The decision of the jurisdictional High Court is binding on the Tribunal and first appellate authority working within the jurisdiction of the High Court. - Decided in favour of assessee.
Issues Involved:
1. Whether the delayed payment of employees' contribution to Provident Fund (PF) and Employees State Insurance (ESI) before the due date of filing the return under Section 139(1) of the Income Tax Act, 1961, can be treated as income of the assessee. Issue-wise Detailed Analysis: 1. Delayed Payment of Employees' Contribution to PF and ESI: The core issue in this case revolves around whether the delayed payment of employees' contribution to PF and ESI, made before the due date of filing the return under Section 139(1) of the Income Tax Act, 1961, should be treated as income of the assessee. Facts of the Case: The Assessing Officer (AO) disallowed an amount of ?2,14,549/- for the delayed deposit of contributions to PF and ESI. The contributions were made after the due date prescribed under the relevant Acts but before the due date for filing the return of income under Section 139(1). The CIT(A) upheld this disallowance, interpreting the "due date" in Section 36(1)(va) as the date prescribed under the relevant Acts and not the due date for filing the return of income. CIT(A)'s Findings: The CIT(A) held that the "due date" referred to in Section 36(1)(va) is the date by which the employer must credit the employee's contribution to the relevant fund under any Act, rule, order, or notification. The CIT(A) further noted that Section 43B, which allows deductions on actual payment, applies only to the employer's contributions and not to the employees' contributions. Tribunal's Analysis: The Tribunal reviewed the CIT(A)'s findings and the relevant judicial pronouncements, particularly the Delhi High Court's decision in CIT Vs. AIMIL Ltd. (2010) 321 ITR 508. The Delhi High Court had previously considered the issue of employees' contributions deposited after the due dates prescribed under the relevant Acts but before the due date for filing the return of income. The High Court allowed the benefit of deduction for such contributions if paid before the return is filed. Key Judicial Pronouncements: - CIT Vs. AIMIL Ltd. (2010) 321 ITR 508: The Delhi High Court allowed the deduction for employees' contributions to PF and ESI if paid before the due date for filing the return of income, even if deposited after the due dates prescribed under the relevant Acts. - CIT Vs. Vinay Cement Ltd. (2007) 213 CTR (SC) 268: The Supreme Court held that contributions made before the filing of the return are eligible for deduction. - CIT Vs. Dharmendra Sharma (2007) 213 CTR (Del) 609: The Delhi High Court reaffirmed the principle that contributions made before the due date for filing the return are deductible. Tribunal's Conclusion: The Tribunal concluded that the decision of the jurisdictional High Court is binding. Therefore, following the Delhi High Court's ruling in AIMIL Ltd., the Tribunal set aside the order of the CIT(A) and directed the AO to delete the disallowance of ?2,14,549/-. The Tribunal allowed the appeal of the assessee, holding that the delayed payment of employees' contributions to PF and ESI, made before the due date for filing the return under Section 139(1), should not be treated as income of the assessee. Final Decision: The appeal of the assessee was allowed, and the disallowance of ?2,14,549/- was directed to be deleted. The decision was pronounced in the open court on 4th October 2017.
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