2021 (9) TMI 598 - AT - Income Tax

Late payment of Employee's Contribution towards EPF and ESI u/s 36(1)(va) - HELD THAT - Since in terms of the provision of Section 36(1)(va) r.w.s. 2(24)(x) the deduction from employees contribution is allowable only if such sum is credited by employer to the employees account in the relevant fund or funds before due date which has admittedly not done by the assessee, AO disallowed such claim. First Appellate Authority relying upon the ratio laid down in the order passed in the case of CIT vs. Gujarat State Road Transport Corporation (GSRTC) 2014 (1) TMI 502 - GUJARAT HIGH COURT confirmed such addition made by the AO which, in our considered view, is just and proper, without any ambiguity so as to warrant interference - we confirm the addition made by the CIT(A). The assessee's appeal is thus, found to be devoid of any merit and hence, dismissed.

Summary

Issues:
1. Disallowance of Employee's Contribution towards EPF and ESI under Section 36(1)(va) of the Income Tax Act, 1961 for A.Y. 2015-16.

The judgment pertains to an appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeals) and the ACIT, Ahmedabad, regarding the disallowance of ?11,37,694 made by the Assessing Officer on account of late payment of Employee's Contribution towards EPF and ESI under Section 36(1)(va) of the Income Tax Act, 1961. The assessee had deposited the contribution after the due date, leading to the disallowance. The First Appellate Authority confirmed the disallowance based on the jurisdictional High Court's decision in the case of CIT vs. Gujarat State Road Transport Corporation (GSRTC), thereby upholding the addition made by the Ld. CIT(A). The Tribunal found no merit in the assessee's appeal and dismissed it.

The key issue in this case was the disallowance of Employee's Contribution towards EPF and ESI under Section 36(1)(va) of the Income Tax Act, 1961 for the Assessment Year 2015-16. The assessee had deposited the contribution after the due date, which led to the disallowance as per the provisions of Section 36(1)(va) r.w.s. 2(24)(x). The Tribunal noted that the deduction from employees' contribution is allowable only if the sum is credited by the employer to the employees' account in the relevant fund before the due date, which the assessee had failed to do. The First Appellate Authority relied on the decision of the jurisdictional High Court in the case of CIT vs. Gujarat State Road Transport Corporation (GSRTC) to confirm the addition made by the Assessing Officer. The Tribunal upheld this decision, stating that it was just and proper without ambiguity, and dismissed the appeal as devoid of merit.

In conclusion, the Tribunal affirmed the disallowance of ?11,37,694 made by the Assessing Officer on account of late payment of Employee's Contribution towards EPF and ESI under Section 36(1)(va) for the Assessment Year 2015-16. The decision was based on the failure of the assessee to credit the sum to the employees' account in the relevant fund before the due date, as required by law. The Tribunal upheld the First Appellate Authority's decision, citing the precedent set by the jurisdictional High Court in a similar case, and dismissed the appeal, finding it lacking in merit.