2021 (4) TMI 535 - AT - Income Tax

Delayed remittance of Provident Fund contribution and ESI - disallowance u/s 36(1)(va) OR u/s 43B - DR has argued that unlike the employers contribution, the employees part of contribution to PF and ESI are not allowable under section 43B of the Act since the said contributions are not paid within the due dates as specified in the respective Acts, and such unpaid employees contributions are liable for disallowance under section 36(1)(va) r.w. section 2(24)(x) - By following the decision of CIT v. Industrial Security Intelligence India Pvt. Ltd. 2015 (7) TMI 1063 - MADRAS HIGH COURT CIT(A) directed the Assessing Officer to allow the actual amount paid before the due date of filing the returns under section 139(1) of the Act - HELD THAT - As in this case, on perusal of the details of break-up of the PF/ESI contribution remitted on the actual dates as furnished by the ld. Counsel for the assessee, we find that the assessee has remitted the remittance of the employee s contribution to PF and ESI much before the filing of the return of income under section 139(1) of the Act on 26.09.2014 for the assessment year 2014-15. In view of the above facts and respectfully following the above decision of the Hon ble Jurisdictional High Court, we find no infirmity in the order passed by the ld. CIT(A) on this issue and accordingly, the ground raised by the Revenue stands dismissed.

Issues:
- Disallowance of belated remittance of employees' contribution of PF and ESI under section 36(1)(va) of the Income Tax Act, 1961.

Detailed Analysis:

1. Issue of Disallowance under Section 36(1)(va):
- The Revenue appealed against the deletion of the addition made towards belated remittance of employees' contribution of PF and ESI, disallowed under section 36(1)(va) of the Income Tax Act, 1961.
- The Assessing Officer disallowed the belated remittance of employees' contribution of PF and ESI under section 36(1)(va) during the assessment under section 143(3) of the Act.
- The ld. CIT(A) directed the Assessing Officer to allow the actual amount paid before the due date of filing the returns under section 139(1) of the Act, relying on a decision of the Hon'ble Jurisdictional High Court.
- The Revenue contended that employees' contributions to PF and ESI are not allowable under section 43B of the Act if not paid within specified due dates, leading to disallowance under section 36(1)(va).
- The assessee argued that the issue was favorably covered by the decision of the Hon'ble Jurisdictional High Court as considered by the ld. CIT(A).

2. Judicial Interpretation and Precedents:
- The Hon'ble Jurisdictional High Court's decision highlighted that if the employees' contribution towards Provident Fund and ESI was paid after the due date specified under the relevant Act but before the due date of filing the return under the Income Tax Act, no disallowance could be made under section 43B.
- The Tribunal's reliance on the Supreme Court's decision and the Delhi High Court's ruling supported the allowance of employees' contribution to PF and ESI if paid before the due date for filing the return, even if remitted beyond the grace period allowed under the respective Acts.

3. Final Decision and Dismissal of Appeal:
- The Tribunal directed the Assessing Officer to delete the disallowances made under section 43B for both assessment years, following the precedents and legal interpretations.
- The Revenue's appeal was dismissed as the employees' contribution to PF and ESI was remitted before the due date for filing the return of income, in compliance with the relevant legal provisions.
- The order passed by the ld. CIT(A) was upheld, and the ground raised by the Revenue was dismissed, resulting in the dismissal of the appeal filed by the Revenue.

This detailed analysis outlines the legal issues, interpretations of relevant provisions, judicial precedents, and the final decision regarding the disallowance of belated remittance of employees' contribution of PF and ESI under the Income Tax Act.

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