The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that Employee’s contribution towards PF has to be deposited before the due date mentioned in the Employees’ Provident Funds and Miscellaneous Provisions Act,1952.
Subhash Deshmukh and Company, the assessee firm filed a return of Income on 27/11/2014. The Assessing Officer(AO) noticed that the assessee had paid Rs.32,802/- towards Employees Contribution towards PF beyond the due date mentioned in the relevant statute but before the due date of filing the return. The AO disallowed the said amount andinterest of Rs.1,92,49,388/-.
On appeal, the CIT(A) allowed the assessee’s ground regarding the employee’s contribution towards PF following the decision of the Bombay High Court.
The Supreme Court(SC)has held that the employee’s contribution towards PF has to be deposited before the due date mentioned in the respective statute. It was observed that the amount was not deposited before the due date mentioned in The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
A Coram of ITAT comprisingof Shri S S Godara, Judicial Member and Dr Dipak P Ripote, Accountant Member observed that since the assessee has not deposited the amount by the respective statute, the impugned amount has been rightly disallowed by the AO.
The AO observed that there was a debit balance in the capital account. The AO also observed that no interest was charged but the assessee has paid interest of Rs.3,04,85,927/- on a bank loan and disallowed the AO proportionate interest. The CIT(A) directed to delete the addition.
It was observed that neither the Assessing Officer nor the CIT(A) has exactly brought on record the fund flow statement and nexus of a loan bearing funds to the withdrawal of the capital. The Tribunal set aside the issue to the file of the Assessing Officer for fresh adjudication after allowing the assessee. The appeal of the Revenue was Partly Allowed.
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