The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that Employees contribution to PF/ESI deposited after due date under the Income Tax Act is not allowable as deduction under Section 36(1)(va) of the Income Tax Act, 1961.
The Assessee, Creative Textile Mills Pvt. Ltd. raised the ground that the Commissioner of Income Tax (Appeals) [CIT(A)] has erred in confirming the disallowances of Rs.10,09,648/- payment of Provident Fund (PF)/ Employees’ State Insurance Corporation (ESIC) under Section 36(1)(va) of Income Tax Act and has also erred in not appreciating that the amendment made by Finance Act, 2021 is prospective in nature under the facts and circumstances, the addition of Rs.10,09,648/- ought to have been deleted.
The counsel of the assessee admitted that Employees contribution to PF/ESI deposited after due date under the Income Tax Act is not allowable as deduction under Section 36(1)(va) of the Income Tax Act in view of decision of the Supreme Court in the case of Checkmate Services Pvt. Ltd. v. CIT.
The counsel further submitted that as per the clause 38 of the Provident Fund Scheme employee’s contribution to the provident fund is required to be deposited within 15 days from the close of every month.
The Counsel has referred to the decision of the Co-ordinate Bench of the Tribunal (Kolkata) Bench in the case of Kanoi Paper and Industries Ltd ACIT in 1260/Mum/1996.
The Madras High Court in the case of the Commissioner of Income Pressing Ltd. has held that the term every month in clause 58 of the Provident Fund Scheme should be read as month in which the wages were actually earned that is the salary payable. The High Court being higher in hierarchy of judiciary than the Tribunal, therefore following the decision of the Madras High Court rejected the prayer of the counsel of the assessee for restoring the matter back to the Assessing Officer (AO).
The two-bench member comprising of Om Prakash Kant (Accountant member) and Kavitha Rajagopal (Judicial member) dismissed the appeal made by the assessee.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
