Delayed Deposit of Employees Contribution to PF and ESI cannot be Claimed Even when Deposited Within Due Date of Filing Return: ITAT [Read Order]

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that the delayed deposit of employee's contribution to Provident Fund (PF) and Employees’ State Insurance (ESI) could not be claimed even if it was deposited within the due date of filing return.

The assessee-Drishti Apparels is a resident partnership firm. While proposing the return of income filed by the assessee for the impugned assessment year, the Centralised Processing Centre (CPC) noticed that though employees’ contribution to PF and ESI had not been deposited within the due date prescribed under the relevant statutes governing such payments, in terms of Section 36(i)(va) of the Income Tax Act, 1961, however, the assessee still claimed deduction.

Since, the deduction claimed by the assessee was inadmissible, while issuing intimation under Section 143(1) of the Income Tax Act, the CPC disallowed the deduction claimed and accordingly adjusted the income of the assessee.

After receiving the intimation issued under Section 143(1) of the Income Tax Act,  assessee moved application under Section 154 of the Income Tax Act seeking rectification of mistake in the intimation issued, insofar as, it related to disallowance of deduction claimed towards payment of employees contribution to PF and ESI. However, the rectification application was rejected by the CPC.

Pramod Kumar appeared on behalf of the assessee.

The two-member Bench of G.S. Pannu, (President) and Saktijit Dey, (Judicial Member)  dismissed the appeal filed by the assessee holding that the assessee had not deposited the employees contribution to PF and ESI within the due date prescribed under the statutes governing such payments.

The submission of the assessee that “payments were made within the due date of filing of return of income under section 139(1) of the Income Tax Act, Hence, deduction claimed was allowable” were held to be not acceptable by the Bench, referring to the Supreme Court decision in case of Checkmate Services Pvt. Ltd. Vs CIT.

To Read the full text of the Order CLICK HERE

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