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2024 (7) TMI 28 - AT - Income TaxIssues: 1. Disallowance of Rs. 85,23,450 under section 36(1)(va) for delayed deposits of PF 2. Treatment of employees' and employer's contributions towards PF and ESI 3. Applicability of section 43B for deduction of employer's contribution 4. Legal precedent set by the Supreme Court in 'Checkmate Services Pvt. Ltd. Vs. CIT' Issue 1: Disallowance of Rs. 85,23,450 under section 36(1)(va) for delayed deposits of PF The appeal was filed against the order of the National Faceless Appeal Centre confirming the disallowance made by the Assessing Officer under section 36(1)(va) of the Income Tax Act for delayed payment of Provident Fund (PF) and Employees State Insurance (ESI). The main contention was the disallowance of Rs. 85,23,450 due to delayed deposits. Issue 2: Treatment of employees' and employer's contributions towards PF and ESI The Assessing Officer treated the entire amount of Rs. 85,23,450 as employees' contribution towards PF and ESI, leading to the disallowance under section 36(1)(va). The appellant argued that the employer's contribution was deposited before the due date of filing the Income Tax Return and should be allowed as a deduction under section 43B of the Act. Issue 3: Applicability of section 43B for deduction of employer's contribution The counsel for the assessee contended that the employer's contribution, deposited before the due date of filing the return of income, should be allowed as a deduction under section 43B of the Act. The Tribunal directed the Assessing Officer to verify this claim and allow the deduction if the employer's contribution was indeed deposited on time. Issue 4: Legal precedent set by the Supreme Court in 'Checkmate Services Pvt. Ltd. Vs. CIT' The appellant did not press the issue of delayed deposit of employees' contribution to PF/ESI, citing the decision of the Hon'ble Supreme Court in 'Checkmate Services Pvt. Ltd. Vs. CIT'. The Supreme Court ruling stated that deduction under section 36(1)(va) for delayed deposits of employees' contribution to PF cannot be claimed, even if deposited before the due date of filing the return, when read with Section 43B of the Income-tax Act, 1961. In conclusion, the appeal was partly allowed for statistical purposes. The Tribunal directed the Assessing Officer to verify the timing of the employer's contribution deposit and allow the deduction accordingly. The legal precedent established by the Supreme Court regarding the disallowance of delayed deposits of employees' contribution to PF/ESI was upheld, emphasizing the importance of timely compliance with statutory provisions.
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