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TMI Blog2023 (8) TMI 1583X X X X Extracts X X X X X X X X Extracts X X X X ..... alls due in subsequent month and therefore, the due date as per the PF and ESCI Act also falls in subsequent to the month when the salary is due. This is evident from the copy of ledger account of the salary as noted above and it is seen that there is no delay in most of the payments which is evident from documents appearing at pages 197-207. Later on, the tax auditor have also clarified that there is no delay. Accordingly, we set aside this issue to the file of the ld. AO to examine the details and the revised certificate of the auditor and if it is found that there is no delay, then no disallowance should be made as in the case of the assessee the delay is to be seen when the salary payable and salary paid falls due in subsequent month and the due date has to be reckoned from the subsequent month. The AO is directed to verify and grant consequential relief. Issue of gratuity payment tax auditor due to oversight in AY 2018-19 reported the said gratuity provision in form 3CD as disallowable u/s 43B of the Act. Based on this report the said amount was added to the total income in the intimation issued u/s 143(1) of the Act. Later when the said fact was brought to the attention of ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntribution as per provisions of Provident fund scheme. 2. On the facts and in the circumstances of the case as well as in law the Learned CIT(A) has erred in confirming the action of Learned CPC in disallowing sum of Rs. 18,33,82,186/- towards Employee's contribution to PF/ESIS on the alleged plea that the same has not been paid within the due date prescribed under the Act, without considering the facts and circumstances of the case. 3. On the facts and in the circumstances of the case as well as in law the Learned CIT(A) has erred in confirming the action of Learned CPC in disallowing sum of Rs. 11,84,46,784/- towards provision for Gratuity, without considering the facts and circumstances of the case. Grounds Taken in AY 2019-20 1. On the facts and in the circumstances of the case as well as in law the Learned CIT(A) has erred in confirming the action of Learned CPC in disallowing sum of Rs. 20,40,79,237/- towards Employee's contribution to PF/ESIS without appreciating the fact that there is no delay in payment of employee contribution as per provisions of Provident fund scheme. 2. On the facts and in the circumstances of the case as well as in law the Learned CIT(A) has e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onth 82 137 4 Copy of agreement entered with client 138 175 5 Copy of Attendance sheet as certified by client 176 195 6 Certificate issued by auditor clarifying mistake in tax audit report revised Annexure to Form 3CD for EPF/ESIC due date and payment details. 196 207 6. We have heard both the parties at length and also perused the relevant material placed on record. In so far as the issue of Employees contribution to provident fund / ESIC as per the provisions of section 36(1)(va), any sum received by the assessee from any of his employees will be allowed as deduction, if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the due date. Due date here means the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued there under or under any standing order, award, contract of service or otherwise. 7. Accordingly, due date as defined under EPF Act is relevant. Section 38 of Employee Provident Fund Scheme 1952, the due date of payment has been defined as under:- 38. Mode of payment of contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation, it is clear that the payments need to be made within 15 days from the close of the month in which the payment of salary is due or payable. This interpretation has also been upheld by the Hon'ble Gujarat High Court in case of PCIT Vs. Suzlon Energy Ltd. (115 Taxmann.com 340)). In the case of the assessee as stated above, the assessee company is providing security services to various corporate and public places for which it deputes its employee who carry our work at clients' place. After end of the month the client certify the number of days worked by the particular employee and accordingly, Assessee Company raises the bill on the said client and pay salary to the employee. To demonstrate this fact, copy of attendance verification by the client has been enclosed on page 176-195 onwards of the paper book, on which our attention was drawn. Thus, in this case the salary is due and payable only in the subsequent month when the client certifies the attendance of the employee so deputed at his place. As per agreement entered with these clients, (sample copies of which have been enclosed at pages 138-175) there is specific clause of salary payable to such employee within 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ledger account of the salary as noted above and it is seen that there is no delay in most of the payments which is evident from documents appearing at pages 197-207. Later on, the tax auditor have also clarified that there is no delay. Accordingly, we set aside this issue to the file of the ld. AO to examine the details and the revised certificate of the auditor and if it is found that there is no delay, then no disallowance should be made as in the case of the assessee the delay is to be seen when the salary payable and salary paid falls due in subsequent month and the due date has to be reckoned from the subsequent month. The AO is directed to verify and grant consequential relief. 13. Now, on the issue of gratuity payment, the facts are that assessee-company entered into an arrangement with the employees that on completion of every year, the services of each employee would be provided with service weightage, which would get accumulated during period of service and the same could be withdrawn by the employees at the time of retirement or termination of service. The assessee claimed deduction on a provision made by way of retirement benefit based on service weightage of the emp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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