The Income Tax Appellate Tribunal ( ITAT ), Hyderabad bench has held that the contributions towards ESIC and PF beyond the due date cannot be disallowed if the same was paid before the filing of income tax returns.
Before the Tribunal, the revenue-challenged the order of the first appellate authority wherein the authority deleted disallowance towards ESIC and PF contributions. In the original order, the AO observed that since the assessee failed to substantiate its claim before him, these amounts deserves to be disallowed under section 36(v)(a) of the Income Tax Act.
Upholding the order of the first appellate authority, the Tribunal held that “It is a settled position of law that though the assessee paid the contributions towards ESIC and PF beyond the due date, but, before the filing of the return of income, no disallowance can be made in this regard. The Hon’ble Delhi High Court in CIT VS. Aimil Ltd. & Ors. [(2010) 321 ITR 508 (Del)] has held that if the employees’ share of contribution is paid before the due date of filing the return u/s 139(1) of the Income-tax Act, 1961 then no disallowance can be made.”
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