ITAT deletes Addition on PF, ESIC Contribution of Employees, deposited beyond due date but before filing Income Tax Return [Read Order]

The Income Tax Appellate Tribunal (ITAT), Delhi Bench deletes additions in respect of Provident Fund (PF) and Employees' State Insurance Corporation (ESIC) contributions of the employees, deposited beyond the due date but before filing Income Tax Return.

The assessee, Indo States Exports submitted that authorities below were not justified in disallowing the claim of the assessee in respect of the employee’s contribution.

The assessee contended that the A.O. erred in law and on merits in making addition or adjustment of Rs.3,01,631/- for the PF and ESIC contribution of the employees, deposited beyond the due date as per PF and ESIC Act but within the time allowed to file the ITR under section 139(1) and deposited before filing Income Tax return.

The CIT(A) ruled that the appellant is not entitled to deduction u/s 36(1)(va) in respect of delayed payment of employee’s contribution towards EPF and ESI before the due date of filing of ITR amounting to Rs.3,01,631/-. The appellant is keeping Government money in his possession which is against the spirit of the law. Also, there will be no sanctity for any due date if the same is allowed till another date. The ground of appeal taken by the appellant is rejected.”

He submitted that the issue is squarely covered by the latest judgment of Delhi High Court rendered in the case of PCIT vs Pro Interactive Service (India) Pvt. Ltd. order.

The coram of Judicial Member, Kul Bharat in line of the decision of  Delhi High Court in the case of PCIT vs Pro Interactive Service (India) Pvt. Ltd. held that the legislative intent was/is to ensure that the amount paid is allowed as an expenditure only when payment is actually made. We do not think 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(23)(x) of the Act.

The ITAT directed the Assessing Officer to delete the addition in respect of the Provident Fund (PF) and Employees' State Insurance Corporation (ESIC) contributions of the employees.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.

Indo States Exports vs ACIT , 2021 TAXSCAN (ITAT) 272 , Sh. Raj Kumar Gupta , Sh. R.K.Gupta