2019 (6) TMI 1116 - AT - Income Tax

Allowability of deduction u/s 36(1)(va) on the employees contribution towards EPF - HELD THAT - This issue is squarely covered against the assessee by the judgment of the Jurisdictional High Court in the case of Popular Vehicles and Services Pvt. Ltd. vs. CIT 2018 (8) TMI 133 - KERALA HIGH COURT since the employees' contribution was collected from the employees as a deduction in their salary itself it would in effect be income of the assesses, as had been indicated in the definition of income under section 2(24)(x). The employees' contribution towards the funds was regulated by sub-clause (x) of section 2(24) and clause (va) of section 36(1) and would not be affected by section 43B. The non obstante clause of section 43B had no effect in so far as the employees' contribution which was specifically covered by clause (va) of section 36(1). By virtue of the Explanation below clause (va), no deduction could be claimed if the contribution had not been paid after collection from the employees by way of deduction from their salaries, within the due date under the labour welfare Acts. The deletion of a proviso under section 43B could not render otiose the Explanation under section 36(1)(va) - Decided against assessee.

Summary

Issues:
Delay in filing appeal before Tribunal, Claim for deduction under Section 36(VA) of the Income Tax Act, Disallowance of EPF contribution under Section 36(1)(va) of the Act, Interpretation of previous court judgments, Admissibility of appeal for adjudication.

Delay in filing appeal before Tribunal:
The appeal was filed with a delay of 79 days, citing medical reasons for the delay. The Tribunal, after considering the reasons provided by the assessee, condoned the delay and admitted the appeal for adjudication.

Claim for deduction under Section 36(VA) of the Income Tax Act:
The assessee contended that they were eligible for deduction under Section 36(VA) of the Income Tax Act, claiming that certain aspects were not properly appreciated by the lower authorities. The Tribunal, however, dismissed this claim based on the interpretation of relevant legal provisions and previous court judgments.

Disallowance of EPF contribution under Section 36(1)(va) of the Act:
The Assessing Officer disallowed the EPF contribution received from employees under Section 36(1)(va) of the Act, as the amount was not remitted within the due date. The CIT(A) upheld this disallowance, stating that the deduction under Section 36(1)(va) is available only if the payment is deposited before the due date specified in the section. The Tribunal affirmed this decision, relying on a judgment of the Jurisdictional High Court.

Interpretation of previous court judgments:
The assessee relied on previous court judgments to support their claim, including a decision of the Supreme Court. However, the CIT(A) and the Tribunal found that the issue was already decided against the assessee by the Jurisdictional High Court, and therefore, the claim for relief based on previous court judgments was dismissed.

Admissibility of appeal for adjudication:
The Tribunal, after considering all submissions and relevant legal provisions, dismissed the appeal filed by the assessee, based on the interpretation of the law and previous court judgments. The order was pronounced in open court on 19th June 2019.