Belated Remittances Towards Employees Contribution to EPF & ESI: ITAT sustains Disallowance [Read Order]

The Bangalore Bench of Income Tax Appellate Tribunal (ITAT) has sustained disallowance as the contribution towards an EPF and ESI was remitted belatedly.

The assessee MTR Maiya’s, was a partnership firm engaged in the business of food preparation and sweets etc. It filed a return of income for AY 2018-19 declaring total income. The return was processed under Section 143(1) of the Income Tax Act determining total income , making disallowance towards delay in payment of employees contribution to PF and ESI under Section 36(1)(va) of the Income Tax Act.

The assessee also submitted that there was a delay in remittance of EPF & ESI under the respective Acts, but the remittance was made before the due date for filing return of income under Section 139(1) of the Income Tax Act. 

Ravishankar S.V. on behalf of the assessee submitted that the remittances were within the due date for filing return under Section 139(1) of the Income Tax Act, though they were belated payments under the respective Acts and therefore no disallowance was called for.

 P. Suresh Rao, appeared on behalf of the revenue.

The two-member Bench of GEORGE GEORGEK.,(JUDICIAL MEMBER) AND LAXMI PRASAD SAHU, (ACCOUNTANT MEMBER)  allowed the appeal and sustained the disallowance towards s belated remittances towards employees contribution to EPF & ESI under the respective Acts.

The Bench referred the Supreme Court judgement in Checkmate Services Ltd. Vs CIT wherein it was held that that, “Section 43B(b) does not cover employees' contributions to PF, ESI etc., deducted by employer from salaries of employees and that employees contribution has to be deposited within the due date u/s 36(1)(va) i.e. due dates under the relevant employee welfare legislation like PF Act, ESI Act etc. failing which the same would be treated as income in the hands of the employer u/s.2(24)(x).”

To Read the full text of the Order CLICK HERE

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