Delay in Payment of Employer’s Contribution is not lost on basis of deferment of Deduction on Payment basis u/s.43B: ITAT dismisses plea regarding Delay of Payment during COVID [Read Order]

The Bangalore bench of the Income Tax Appellate Tribunal held that any failure to pay within the prescribed due date under the respective PF Act or Scheme will result in negating employer’s claim for deduction permanently forever under section 36(1)(va). Also there is no exemption regarding payment is related to April, 2020, which is during the Covid period

The assessee raised the appeal against the order of NFAC on the grounds that The CPC/AO grievously erred by adding to income under section 36(l)(va) of Rs.77,36,680/- being-Amount not paid to the concerned authority before due date specified under PF law for the month of April 2020. And without prejudice to the other grounds, the CPC/AO has erred on facts and in law by making the addition of Rs.77,36,680/- in the order issued under section 143(1) on a debatable and controversial issue which is beyond the scope of Section 143(1) and NFAC has erred by allowing the same.

The crux of grounds raised by the assessee is with regard to disallowance of employees’ contribution of PF to the government account after the due date as mentioned in PF Act.

The Tribunal held that the result of any failure to pay within the prescribed dates also leads to different results. In the case of employee’s contribution, any failure to pay within the prescribed due date under the respective PF Act or Scheme will result in negating employer’s claim for deduction permanently forever under section 36(1)(va).

On the other hand, delay in payment of employer’s contribution is visited with deferment of deduction on payment basis under section 43B and is therefore not lost totally. Therefore, as per the above decision, the disallowance made by the Revenue authorities, were fully justified.

The two bench member consisting of Beena Pillai (Judicial member) and Chandra Poojari (Accountant member) held that regarding the plea of the assessee that payment is related to April, 2020, which is during the Covid period, in our opinion, there is no exemption granted by Government in this regard. Thus the appeal was rejected.

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