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2023 (2) TMI 264 - AT - Income TaxDelayed remittance of EPF/ESIC contribution by the assessee - employees contribution paid before due date for filing the return of income u/s.139(1) whether otherwise allowable u/s.43B - HELD THAT - As relying on case of Checkmate Services 2022 (10) TMI 617 - SUPREME COURT the employees contribution to PF and ESI should be remitted before the due date as per explanation to section 36(1)(va) i.e., on or before the due date under the relevant employee welfare legislation like PF Act, ESI Act etc., for the same to be otherwise allowable u/s.43B. We therefore see no reason to interfere with the order of the CIT(Appeals). The grounds taken by the assessee on this issue are dismissed.
Issues Involved:
Deduction on delayed remittance of EPF/ESIC contribution by the assessee. Analysis: The judgment deals with an appeal by the assessee against the order of the CIT(Appeals) regarding the deduction of EPF/ESIC contribution. The assessee, a private limited company engaged in export activities, filed its return for the assessment year 2019-20, claiming a deduction for the contribution. However, the CPC disallowed the delayed contribution under section 36(1)(va) of the Income-tax Act, 1961, which was upheld by the CIT(Appeals, leading to the appeal before the Tribunal. The primary issue revolves around whether the assessee is eligible for deduction on the delayed remittance of EPF/ESIC contribution. The assessee contended that since the contribution was remitted within the due date for filing the return of income, the deduction should be allowed. The assessee relied on previous court decisions, including the Hon'ble High Court of Karnataka and the Supreme Court judgments. On the other hand, the Department argued that the latest Supreme Court decision in the case of Checkmate Services clarified that section 43B(b) does not cover employees' contributions to PF, ESI, etc., and emphasized the importance of depositing such contributions within the due dates specified by relevant employee welfare legislation. The Tribunal analyzed the legal provisions and the Supreme Court's decision in Checkmate Services, emphasizing the distinction between employer's contributions and employees' contributions in terms of their treatment as income. The Court highlighted that the due date for remitting employees' contributions is crucial for claiming deductions under section 36(1)(va) and section 43B. It clarified that the employer's obligation to deposit employees' contributions before the due date is a condition for deduction, as these contributions are not part of the employer's income but deemed as income held in trust. Therefore, the Tribunal upheld the CIT(Appeals) order, dismissing the grounds taken by the assessee on the issue. Additionally, the Tribunal noted that the levy of interest under sections 234B and 234C is consequential to the decision. Ultimately, the appeal by the assessee was dismissed based on the Supreme Court's interpretation and the specific legal provisions governing the remittance of EPF/ESIC contributions within the prescribed due dates. This comprehensive analysis of the judgment highlights the key arguments, legal interpretations, and the final decision rendered by the Tribunal, providing a detailed understanding of the issues involved and the reasoning behind the judgment.
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