The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) directed re-adjudication for the disallowance of workers’ provident fund (PF) contributions because they were made after the deadline in accordance with section 36(1)(VA) of the Income Tax Act of 1961.
Integrity Verification Services Pvt.Ltd, the appellant assesseefiled an appeal against the order passed by the Commissioner of Income Tax (Appeals) for confirming the deduction made by the assessing officer under section 36(1)(va) of the Income Tax Act for the employee’s contribution to the provident fund.
Gyaneshwar Kataram, the counsel for the assessee contended that allowance of employee’s PF contribution was paid after the due date under the relevant acts was the core issue. However, the Assessing Officer (AO) of the Central Processing Centre (CPC) was not justified in adjusting the same under intimation under section 143(1a) of the Income Tax Act.
Further asserted that, on one occasion, the employee’s contribution had been paid on the next day of the due date as the due date was being holidayed. Thus, according to section 10 of the General Clauses Act, 1897 if the due date of payment falls on a holiday, then the payment made on the next day of the due date shall be treated as paid on the due date.
M.P. Ahuja, the counsel for the revenue, claimed that the assessee’s argument was unsupportable because the Supreme Court had ruled that section 36(1)(va) of the Income Tax Act did not permit the deduction of employee contributions to PF made after the due date under the applicable Act, making the assessee’s claim inadmissible.
The ITAT observed that according to the provisions of the General Clauses Act, it was appropriate to restore the issue to the file of the assessing officer for examining the payments made on the day next to the due date, being a holiday on the due date, and allow the deduction accordingly. The two-member bench comprising Om Prakash Kant(Accountant) and Narender Kumar Choudhry (Judicial) directed the matter for re-adjudication to allow the deduction while allowing the appeal filed by the assessee
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