Employees Contribution of PF paid in Government Account before due date filing of ITR is allowable as Deduction: ITAT [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has ruled that the employees contribution of Provident Fund paid in Government Account before due date filing of Income Tax Return ( ITR ) was allowable as deduction.

The Assessee was a company engaged in the business of trading of equipment and accessories. It filed its return of income on 21.11.2008 showing total income of Rs.92, 50,710/-. On scrutiny, the Assessing Office found that in the tax audit report employees’ contribution of Rs.7, 87,510/- has been paid beyond the due date prescribed under the Provident Fund Act. This is the employees’ contribution, which should have been deposited before the due date prescribed under the respective Provident Fund Act.

The Assessee has also deposited Rs.27,124/- being ESIC contribution of the employee beyond the due date prescribed under the ESIC Act. Assessee submits that as both these contributions are paid before the due dates prescribed under Section 139 of the Income Tax Act, hence, are not dis-allowable.

The two member bench of the tribunal comprising Narendar Kumar Choudhry ( Judicial member ) and Prashanth Maharishi ( Accountant member ) found that the Assessee has collected employees’ contribution under the Provident Fund Act and ESIC Act from its employees, however, such contributions were not deposited within due date specified under the respective Provident Fund and ESIC Act but were deposited within the due date prescribed for filing return of income.

Dis-allowance was made by the Assessing Officer and confirmed by the CIT (A) by looking at the provisions of Section 2(24)(x) r/w Section 36(1)(va) of the Income Tax Act. Now this issue is squarely covered against the Assessee by the decision of the Supreme Court in case of Checkmate Services Pvt. Ltd. Vs.CIT (2022) wherein it has been held that such sum collected from employees if not deposited within the due dates prescribed under the respective Provident Fund and ESIC Act, is disallowable irrespective of the fact that the same were deposited before the due dates of filing of return of income

ITAT did not find any merit in the appeal of the Assessee. Accordingly, the appeal of the Assessee was dismissed.

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