Belated deposit of Employees’ Contribution to PF/ESI made before Filing of Income Tax Returns is Not Deductible: Kerala HC [Read Judgment]

Ignorance of Law - KVAT

The Kerala High Court, while dismissing an appeal filed by the Kalyan Silks Thrichur Pvt Ltd, ruled that the belated deposit of employees’ contribution to Provident Fund or Employees State Insurance is not deductible while computing taxable income of the assessee even though the payment was made before the due dtate of filing returns under the Income Tax Act, 1961.

The solitary common issue that arose in the appeals filed by the assessee was with regard to the legality of dis-allowance of deduction made towards belated deposit of employee’s contribution of Provident Fund/Employees State Insurance.

In instant case the first appellate authority confirmed the order of dis-allowance and later the tribunal has decided the cases against the assessee, following the Court’s past decisions in CIT v. South India Corporation (2015) 58 taxmann.com 208 (Kerala) and CIT v. Merchem Ltd. (2015) 61 taxmann.com 119 (Kerala).

Relying on the judicial pronouncements, the division bench comprising Justice Antony Dominic and Justice Dama Seshadri Naidu restored the order of lower authority and dismissed the appeal of assessee.

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