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TMI Blog2019 (10) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... And Shri D.S. Sunder Singh, Hon ble Accountant Member For the Assessee : Shri C. Kameswara Rao, CA. For the Department : Smt. Suman Malik Sr.DR ORDER PER V. DURGA RAO, JUDICIAL MEMBER This appeal by the Revenue is directed against the order of Commissioner of Income Tax (Appeals)-2, Visakhapatnam, dated 24/05/2019 for the Assessment Year 2015-16. 2. The ground Nos.2 3 raised by the Revenue relate to employees contribution to PF ESI. 3. Facts of the case in brief are that in the assessment order, the Assessing Officer has noted that the assessee has deposited employees share of PF to the tune of ₹ 49,74,380/- and ESI of ₹ 10,44,749/- beyond the due dates as stipulated under the PF ESI Acts, therefore, same are disallowed. 4. On appeal, the ld. CIT(A) by following the decision of the ITAT, Visakhapatnam Bench in the case of DCIT Vs. Eastern Power Distribution Company Ltd. in ITA No. 374/VIZ/2017, dated 20/09/2017 directed the Assessing Officer to delete the addition. For the sake of convenience, the relevant portion of the ld.CIT(A) s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sides, perused the material available on record and orders of the authorities below. 8. The issue involved in this appeal is that the Assessing Officer has disallowed the employees contribution in respect of PF ESI on the ground that assessee failed to deposit the same as per the time limit provided in accordance with the respective Acts. On appeal before the ld. CIT(A), it was submitted that the amounts were paid before the due date of filing of the return under section 139(1) of the Act, therefore, the ld. CIT(A) by considering the submissions of the assessee and also by following the decision of the ITAT, Visakhapatnam Bench in the case of Eastern Power Distribution Company of A.P. Ltd. (supra) allowed the appeal of the assessee. For the sake of convenience, the relevant portion of the order passed by the Tribunal in Eastern Power Distribution Company of A.P. Ltd. in ITA No. 609/VIZ/2014 (supra) is extracted as under:- 5. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The A.O. made additions towards belated payment of employees contributions to PF. According t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and as per the scheme, the employer can recover the employees share from the wages paid to the employee. Therefore, as per the PF Act and scheme of contributions, the contributions means and include both employees and employer s share. Similarly, section 2(c) of the Provident Fund Act defines the contribution to mean a contribution payable in respect of a member under the scheme or the contribution payable in respect of an employee to whom the scheme applies. There is a prescribed mode of payment of contributions under the PF Act. Under the said Act, the employer shall contribute both employees and employer share along with administrative charges before the due date specified under the PF Act. The Act prescribed only one due date for depositing the contribution i.e. 15th of subsequent month with the grace period of 5 days which indicates that there is no difference between employee and employer contribution. If the legislature intends to differentiate employees and employer contribution, then there would have been two due dates like in the case of Income Tax Act. Therefore, from the above, it is clear that the Provident Fund Act does not differentiate employees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e due date as prescribed under relevant statute, but before due date of filing of return no disallowance could be made in view of the provisions of section 43B of the Act. In the case of CIT Vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. 35 Taxman 616, the Hon ble High Court of Rajasthan, after referring to the apex court decision in the case of CIT Vs. Alom Extrusions Ltd. 319 ITR 306 CIT Vs. Vinay Cement Ltd. held that the deductions should be allowed for the payment of employees contribution made before the due date of filing of return. Similarly, in the case of CIT Vs. State Bank of Bikaner, the Hon ble Rajasthan High Court held that contribution paid after the due date under the respective Act, but before filing the return of income u/s 139(1) of the Act cannot be disallowed u/s 43B of the Act and or u/s 36(1)(va) of the Act. 9. The Ld. D.R. relied upon the decision of Hon ble High Court of Kerala, in the case of CIT vs. Merchem Ltd, reported in (2015) 378 ITR 443 and submitted that employees contribution to provident fund is allowed as deduction, if the same is deposited on or before the due date specified under the provisions of provident fund Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of the assessee, the entire amount of ₹ 3,10,257/- has been disallowed u/sec. 37(1) of the Act and added the same to the total income of the assessee. 12. On appeal, ld. CIT(A) restricted the disallowance to 50% of such expenditure and the remaining 50% is allowed. 13. On being aggrieved, Revenue carried the matter in appeal before this Tribunal. 14. Ld.DR relied on the order of the Assessing Officer, whereas ld.AR relied on the order of the ld. CIT(A). 15. We have heard both the sides, perused the material available on record and orders of the authorities below. 16. The assessee has claimed the expenditure relates to festival /entertainment expenses and pooja expenses amounting to ₹ 3,10,257/-. According to the Assessing Officer, the above expenditure incurred by the assessee is personal in nature and not for the purpose of business, therefore the same is disallowed. On appeal, ld. CIT(A) restricted the expenditure to 50% and directed the Assessing Officer to disallow the claim of the assessee to the extent of 50%. For the sake of convenience, the relevant portion of the order is ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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