2018 (10) TMI 134 - HC - Income Tax

Employees contribution of Provident Fund and ESIC - failure to deposit before due date - addition u/s 36 1 (v)(a) read with Section 2 24 (x) - Held that - This issue has been examined by this Court in the case of Commissioner of Income Tax vs. Gujarat State Road Transport Corporation 2014 (1) TMI 502 - GUJARAT HIGH COURT that as there is no amendment in Section section 36(1)(va) of the Income Tax Act and considering section 36(1)(va) of the Income Tax Act as it stands, with respect to any sum received by the assessee from any of his employees to which the provisions of clause (x) of sub-section (24) of section 2 applies, assessee shall not be entitled to deduction of such amount in computing the income referred to in section 28 if such sum is not credited by the assessee to the employees account in the relevant fund or funds on or before the due date as per explanation to section 36(1)(va) of the Act - By deleting Second Proviso to section 43B by Finance Act, 2003, it cannot be said that Section 36(1) (va) is amended and/or explanation below clause (va) of sub-section (1) of section 36 is deleted, which is with respect to employees contribution - Decision in Alom Extrusions Ltd. (2009 (11) TMI 27 - SUPREME COURT ), distinguished - additions confirmed - Decided in favour of Revenue.

Summary

Issues: Interpretation of Section 36(1)(v)(a) and Section 2(24)(x) of the Income-tax Act, 1961 for confirming addition/disallowance of employees' contributions to Provident Fund and ESIC.

The judgment by the Gujarat High Court involved an appeal challenging the decision of the Income Tax Appellate Tribunal regarding the addition of a sum to the assessee's total income for the Assessment Year 2013-2014. The Assessing Officer had added a specific amount to the income, alleging that the employees' contributions to Provident Fund and ESIC were not deposited within the specified due dates. The counsel for the assessee referred to a previous case involving similar issues, where it was held that deductions are allowed when the sums received from employees are credited to their accounts in the relevant funds before the due date mentioned in the explanation to Section 36(1)(va). The court reiterated this interpretation and concluded that the Tribunal erred in deleting the disallowances made by the Assessing Officer, as the sums were not credited to the employees' accounts within the stipulated time frame. Consequently, the Tax Appeal was dismissed based on the interpretation of relevant provisions of the Income-tax Act, 1961.