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2019 (11) TMI 506 - AT - Income TaxAddition on account of delayed payment of Employees Contribution to Provident Fund and ESIC - HELD THAT - As decided in GUJARAT STATE ROAD TRANSPORT CORPORATION 2014 (1) TMI 502 - GUJARAT HIGH COURT since assessee had not deposited said contribution in respective fund account on date as prescribed in Explanation to section 36(1 )(va), disallowance made by Assessing Officer was just and proper - Appeal of the Assessee is dismissed.
Issues:
Disallowance of delayed payment of Employees Contribution to Provident Fund and ESIC. Analysis: The appeal was filed against the order confirming the disallowance of ?18,69,737/- due to delayed payment of Employees Contribution to Provident Fund and ESIC for A.Y. 2014-15. The assessee, engaged in manufacturing, failed to deposit the employees' contributions within the stipulated time. The audit report revealed multiple instances of delayed payments for both Provident Fund and ESI. The Assessing Officer (A.O.) made the disallowance after the assessee's reply was deemed untenable. The first statutory appeal before the CIT(A) upheld the A.O.'s decision, leading to the second appeal before the ITAT. During the hearing, the assessee's representative conceded that the matter was against them, referencing a judgment of the Hon'ble Gujarat High Court in a similar case involving CIT vs. GSRTC. The High Court's ruling emphasized that deductions for employees' contributions would not be allowed if not credited to the employees' accounts before the due date prescribed under the Income-tax Act. Considering the precedent set by the Gujarat High Court, the ITAT dismissed the appeal, aligning with the decision that disallowance of the amount was justified due to the failure to deposit employees' contributions on time. The judgment emphasized the importance of adhering to statutory timelines for such payments to claim deductions. The order was pronounced on 10-10-2019, upholding the disallowance of ?18,69,737/- for delayed payments of Employees Contribution to Provident Fund and ESIC.
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