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TMI Blog2021 (2) TMI 634X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) has erred in upholding the order of Ld. AO, who had made addition of Rs. 10,27,979/- and Rs. 2,24,261/- U/s. 36(i)(va) of the Act, being the employee's contribution to provident fund and ESI respectively which was deducted from the employee's salary and not remitted into the Government treasury within the period stipulated under the relevant Act. 2. The Ld. CIT(A) has erred in upholding the order of Ld. AO, who had invoked the provisions of section 40(a)(ia) of the Act and disallowed the amount of Rs. 2,10,873/- being 30% of Rs. 7,02,910/- debited to the P & L Account towards audit fees of Rs. 4,32,586/- and towards interest of Rs. 2,70,324/- against which tax was not deducted at source. 3. The brief facts of the case are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;s contribution' to Provident Fund or ESI. This distinction has been understood in light of the CBDT Circular No. 22/2015 dated 17/12/2015. In this background, the contention of the appellant is not accepted as it is not allowable as per Income Tax Act. The disallowance made by the Assessing Officer is upheld." 5. Before us, the Ld. AR submitted that the assessee had remitted the employee's contribution towards PF and ESI which was deducted from their salary within the due date of filing the return under the Income Tax Act, 1961 and therefore, the disallowance is not warranted. It was therefore pleaded that the addition made by the Ld. AO on those grounds may be deleted. The Ld. AR also relied on certain decisions of the Judicia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s extracted herein below for reference:- "[Certain deduction to be only on actual payment.] 43B "notwithstanding anything contained in any other provisions of this Act, a deduction otherwise allowable under this Act in respect of --- (a) ------------------ (b) any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of the employees" ----------------- ----------------- ------------------ Provided that nothing contained in this section shall apply in relation to any sum which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution to recognized Provident Fund, Section 43B of the Act makes it clear that deduction will be allowable if the remittance is made with in the due date of filing the return of income. The Hon'ble Gujarat High Court in the case CIT vs. Gujarat State Road Transport Corporation reported in [2014] 366 ITR 170 (Guj.) has observed as under on the issue:- "Under section 2(24)(x) of the Income Tax Act, 1961 any sum received by the assessee-employer from his employees as contribution to any provident fund or superannuation fund or any fund set up under the provisions of the Employees' State Insurance Act, 1948, or any other fund for the welfare of such employees shall be treated as an "Income". Under section 36(1)(va) the assessee shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credited by the assessee to the employees' accounts in the relevant fund or funds on or before the "due date" under the Provident Fund Act, Employees' State Insurance Act, Rule, Order or Notification issued thereunder or under any standing order, award, contract or service or otherwise. There is no amendment in section 36(1)(va) and even the Explanation to section 36(1)(va) is not deleted and is still on the statute and is required to be complied with. Merely because the second proviso to section 43B which provided that even with respect to the employer's contribution (section 43(b)), the assessee was required to credit the amount in the relevant fund under the Provident Fund Act or any other fund for the welfare of the employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the employees' contribution and the latter the employer's contribution. The assessee is entitled to get the benefit of deduction under section 43B(b) as provided under the proviso thereto only with regard to the portion of the amount paid by the employer to the contributory fund. Held, allowing the appeal, that since the assessee had admittedly not paid the remittance of the employees' contribution to the provident fund and ESI within the dates prescribed under the respective Act, the assessee was not entitled to deduction U/s. 43B of the amounts deducted thereunder for and on behalf of the employees." 10. Similar view was vented by the Hon'ble Madhya Pradesh High Court in the case of B.S. Patel vs. DCIT reported in [2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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