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2022 (5) TMI 36 - AT - Income TaxDelayed deposit of employees' contributions towards PF and ESI - disallowance under section 36(1)(va) - HELD THAT - We note that the issue is squarely covered against the assessee by the Jurisdictional High Court decision in case of Gujarat State Road Transportation Corporation 2014 (1) TMI 502 - GUJARAT HIGH COURT wherein it was held that where assessee did not deposit employees' contribution to employees' account in relevant fund before due date prescribed in Explanation to section 36(1)(va), no deduction would be admissible even though he deposits same before due date under section 43B of the Act. Again the Gujarat High Court in the case of Pr. CIT v. Suzlon Energy Ltd. 2020 (2) TMI 792 - GUJARAT HIGH COURT held that where assessee had not deposited employees' contributions towards PF and ESI within prescribed period in law and Assessing Officer by invoking provisions of section 36(1)(va) read with section 2(24)(x) made addition of aforesaid amount to income of assessee, impugned addition made to income of assessee was justified. - Decided against assessee.
Issues:
Appeal against disallowance under section 36(1)(va) of the Income Tax Act due to late payment of ESIC/PF contributions. Analysis: The appeal was filed against the order of the ld. Commissioner of Income Tax (Appeals)-2, Vadodara regarding the disallowance of Rs. 8,54,455 under section 36(1)(va) for the assessment year 2012-13. The assessee contended that the disallowance should not be confirmed as the payments were made before the due date of filing returns. The Gujarat High Court's decision in the case of CIT vs. Gujarat State Road Transportation Corporation was cited in support of the appeal. The assessee sought an adjournment, but none appeared on their behalf. The Tribunal decided to proceed with the case due to the single issue involved, which was the disallowance under section 36(1)(va) based on late ESIC/PF payments. The adjournment application was rejected. The assessing officer disallowed Rs. 8,54,455 on account of late payment of PF contributions by the assessee, citing the Gujarat High Court's decision in the case of Gujarat State Road Transportation Corporation. The ld. CIT(A) upheld the disallowance, stating that the Supreme Court's judgment in the case of Rajasthan State Beverages Corporation Ltd. was not applicable to the current scenario. The appeal was dismissed, and the addition of Rs. 8,54,455 was upheld. The Tribunal noted that the issue was covered against the assessee by the Gujarat High Court's decisions in previous cases. The Tribunal held that the disallowance was justified as the employees' contributions towards PF and ESI were not deposited within the prescribed period. Following the Gujarat High Court's decisions, the appeal was dismissed, and the addition made by the assessing officer was upheld. In conclusion, the Tribunal dismissed the appeal of the assessee based on the disallowance under section 36(1)(va) of the Income Tax Act. The decision was in line with the precedents set by the Gujarat High Court in similar cases, where late deposits of ESIC/PF contributions were not allowed as deductions.
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