2023 (3) TMI 257 - AT - Income Tax

Delayed payment of Employees' contribution to Provident Fund u/s 36(1)(va) - HELD THAT - It is undisputed that the employee s contribution to provident fund was deposited by the assessee after the due date prescribed under the relevant statute but within the due date of filing the income tax return in accordance with section 139(1). We find that the Hon ble Supreme Court in Checkmate Services (P.) Ltd. 2022 (10) TMI 617 - SUPREME COURT held that payment towards employee s contribution to provident fund after the due date prescribed under the relevant statute is not allowable as deduction under section 36(1)(va). Decided against assessee.

Summary

Issues:
1. Disallowance on account of delayed payment of employee's contribution to provident fund under section 36(1)(va) of the Income Tax Act.
2. Levy of interest under section 234C of the Act.

Issue 1: Disallowance on account of delayed payment of employee's contribution to provident fund under section 36(1)(va) of the Income Tax Act:

The appeal was filed by the assessee against the order dated 08/09/2022, challenging the disallowance of Rs 6,30,42,740 on account of employees' contribution to Provident Fund under section 36(1)(va) of the Act. The assessee contended that the disallowance was unjustified as the payment was made before the due date of filing the income tax return. The CIT(A) upheld the disallowance, citing that the deduction is not allowable if the entire amount towards employees' contribution is not deposited by the due date. The assessee relied on a Tribunal decision and the Hon'ble Supreme Court's judgment in a similar case. However, the Tribunal, in line with the Supreme Court's decision, held that the payment after the due date prescribed under the relevant statute is not allowable as a deduction under section 36(1)(va) of the Act. Another Tribunal decision reaffirmed this stance, leading to the dismissal of the appeal.

Issue 2: Levy of interest under section 234C of the Act:

The second issue pertained to the levy of interest under section 234C of the Act, which was considered consequential in nature. The Tribunal decided this issue accordingly, without providing detailed analysis or discussion. The appeal was ultimately dismissed based on the findings related to the disallowance of the employee's contribution to provident fund.

In conclusion, the Tribunal upheld the disallowance of the employee's contribution to provident fund due to delayed payment, in line with the Hon'ble Supreme Court's decision. The appeal was dismissed, and the issue related to the levy of interest under section 234C was also decided accordingly, resulting in the overall dismissal of the assessee's appeal.