The Income Tax Appellate Tribunal (ITAT), Delhi Bench while dismissing the appeal of the revenue deleted the addition made on account of late deposit of Employee’s State Insurance Corporation (ESIC) and Provident Fund (PF).
The assessee company, Dee Development Engineers Ltd. is engaged in business of manufacturing and fabrication of piping system and pipe fitting, generation of power through BIO Mass Technology. The assessee company filed return of income declaring a loss. The Company revised its return of income. The case was selected for scrutiny and notices under section 143(2) and 142(1) were issued. The assessee through Authorized Representative filed the details and appeared from time to time during the assessment proceedings. The Assessing Officer made various disallowances and additions and assessed the total loss.
The department submitted that the CIT(A) erred in deleting the said addition without giving proper findings further, the department relied upon the order of the Assessing Officer.
The assessee argued that the assessee company has collected amount towards employees contribution towards ESI & PF and deposited to the Government on various dates as per challans issued. Undisputedly, the assessee has not disputed the fact that the employees contribution towards Provident Fund and ESI was filed after the due date but before filing of the Income Tax Return.
It is a settled principle of law that the amount deposited by the assessee on account of contribution towards PF & ESI would qualify for deduction even though paid after the due dates prescribed under the Provident Fund and ESI Act but before filing of the Income Tax Return.
The coram of R.K.Panda and Suchitra Kamble held that the legislative intent and objective is to treat belated payment of Employee’s Provident Fund (EPD) and Employee’s State Insurance Scheme (ESI) as deemed income of the employer under Section 2(24)(x) of the Act.
“It is settled law that when two judgments are available giving different views then the judgment which is in favour of the assessee shall apply as held in case of Vegetable Products Ltd. by the Supreme Court. Hence, in light of the latest decision in case of Pro Interactive Service (India) Pvt. Ltd., the issue is covered in favour of the assessee,” the ITAT said.
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