Employee’s contribution to PF & ESIC shall not be allowed deduction when Deposited belatedly after Due date and before filling ITR: ITAT [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) held that the employee’s contribution to Provident Fund (PF) and Employee State Insurance Corporation (ESIC) shall not be allowed deduction when deposited belatedly after the due date and before filling of the Income Tax Return (ITR).

The assessee is engaged in the business of customary agency services of tamper/liner vessels and acts as a husbanding agent in respect of vessels owned, operated, chartered, or managed by Korea Marine Transport Co. Ltd. (KMTC Korea) and also provides auxiliary services like filing shipping documents, completing custom formalities, etc. for the customers of KMTC Korea.

The assessee company filed its return of income declaring a total income of Rs.59,36,377/- and the same was processed under Section 143(1) of the Income Tax Act. The Assessing Officer determined the total income at Rs.67,93,660/- by making the impugned additions. The Commissioner of Income Tax (Appeal) [CIT(A)] upheld the addition made by the Assessing Officer.

The assessee had deposited the employee’s contribution to PF for the months of November, December 2013, and January 2014. It was paid after the due date prescribed under relevant Acts but before filing the return of income. The assessee contended that the reason for the delay was because the PF Department had generated the user name and password required for generating challans belatedly inspite of the assessee’s request.

The Authorized Representative contended that the username and password were furnished only after the assessee company had deposited the employee’s contribution. It was stated that the delayed deposit of employee contribution was not attributable to the assessee and prayed that the said addition be deleted.

The Departmental Representative submitted that it is the responsibility of the assessee to have applied for the registration number, user ID, and password soon after its incorporation. It was further submitted that the assessee has not substantiated whether it had applied for the user name registration and password without any delay. He relied on the decision of the Apex Court in the case of Checkmate Services P. Ltd. vs. CIT.

The Two-member bench comprising of Prashant Maharishi (Accountant member) and Kavitha Rajagopal (Judicial member) held that the employee’s contribution to PF & ESIC having been deposited belatedly after the due date prescribed under the relevant acts, nevertheless before the filing of the return of income was not an allowable deduction as per the recent decision of the Supreme Court in the case of Checkmate Services P. Ltd.

Therefore, there was no merit found in the submission of the Authorized Representative and the appeal of the assessee was dismissed.

To Read the full text of the Order CLICK HERE

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