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2021 (4) TMI 1125 - AT - Income TaxDelayed employee's contribution towards Provident Fund - amount paid beyond the due date as specified in the Provident Fund Act.- HELD THAT - As decided in GUJARAT STATE ROAD TRANSPORT CORPORATION 2014 (1) TMI 502 - GUJARAT HIGH COURT the assessee has not credit the employees' Contribution to the employees' account in the relevant fund or funds on or before the due date mentioned in the Explanation to section 36(1)(va), the assessee shall not be entitled to deduction of such amount in computing the income referred in section 28 Also decided in M/S MERCHEM LIMITED 2015 (9) TMI 560 - KERALA HIGH COURT since the assessee had admittedly not paid the remittance of the employees' contribution to the provident fund and ESI within the dates prescribed under the respective Act, the assessee was not entitled to deduction U/s. 43B of the amounts deducted thereunder for and on behalf of the employees. - Decided against assessee.
Issues:
Denial of deduction for employee's contribution towards Provident Fund for AYs 2017-18 and 2018-19 due to late payment. Analysis: The appeals were filed against the orders of the ld. CIT (A)-6, Hyderabad concerning the denial of deduction for employee's contribution towards Provident Fund for AYs 2017-18 and 2018-19. The issue revolved around the contention that the contributions were not paid within the due date specified in the Provident Fund Act. The Ld. CIT (A) upheld the orders of the Ld. AO based on precedents from higher judiciary. The Tribunal examined the provisions of Section 36(1)(va) and Section 43B of the Income Tax Act. Section 36(1)(va) allows deduction if the employee's contribution to Provident Fund/ESI is remitted within the due date mentioned in the relevant Act. On the other hand, Section 43B pertains to the employer's contribution and allows deduction if paid before the due date of filing the return of income. It was clarified that Section 43B does not apply to employee's contribution, as it is distinct from the employer's contribution. The Tribunal emphasized that employee's contribution is a part of the employee's salary, remitted by the employer on the employee's behalf. The Tribunal cited judgments from the Hon'ble Gujarat High Court and the Hon'ble Kerala High Court to support this interpretation. The Hon'ble Gujarat High Court emphasized that under Section 36(1)(va), the due date for remittance of employee's contribution is crucial for claiming the deduction. Similarly, the Hon'ble Kerala High Court highlighted the distinction between employee's and employer's contributions, affirming that the deduction under Section 43B applies only to the employer's contribution. In line with the legal precedents and the provisions of the Income Tax Act, the Tribunal found no error in the decisions of the Revenue Authorities. Consequently, the appeals were dismissed, confirming the orders of the Revenue Authorities for AYs 2017-18 and 2018-19. The Tribunal's decision aligned with the interpretations provided by the higher judiciary and the specific provisions of the Act. Therefore, the Tribunal upheld the denial of deduction for employee's contribution towards Provident Fund due to late payment, in accordance with the legal framework and established judicial interpretations.
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