The Mumbai Bench of Income Tax Appellate Tribunal (ITAT), held that delayed payment of Employees Contribution to PF (Provident Fund) and ESIC (Employees’ State Insurance Corporation) after the due date prescribed under the relevant Acts even if paid before filing of the return of income was not an allowable deduction, hence upheld the disallowance by Commissioner of Income Tax (Appeals) [CIT(A)].
The assessee company Eximius Management Pvt. Ltd is engaged in the business of providing facility management, security services and other related services to its clients and had filed its return of income declaring total income of Rs. 2,11,56,360/-. The Assessing Officer (AO) under Section 143(1)(a) of the Income Tax Act,1961 made the adjustments towards delayed payment of Employees Contribution to PF and under Section 36(1)(va) of the Income Tax Act and under Section 40(a)(ia) of the Income Tax Act towards the non deduction TDS (Tax deducted at source) on audit fees.
The assessee had then filed an application for rectification under Section 154 of the Income Tax Act which was disposed off by the AO upholding the disallowance made under Section 36(1)(va) and 40(a)(ia) of the Income Tax Act. Aggrived by the order the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)], which confirmed the addition relying on the decision of the Apex Court in the case of Checkmate Services Pvt. Ltd.
Further aggrieved the assessee filed an appeal before the Tribunal.
The Two Member Bench comprising of Om Prakash Kant, Accountant Member and Ms. Kavitha Rajagopal, Judicial Member observed that the assessee has deposited the employee’s contribution towards PF and ESIC after the due date prescribed under the relevant Acts nevertheless before filling of the return of income.
The Tribunal relied on the decision of the Apex Court in the case of Checkmate Services Pvt. Ltd. where it laid down that delayed payment of Employees Contribution to PF and ESIC after the due date prescribed under the relevant Acts even if paid before filing of the return of income was not an allowable deduction.
Thus the tribunal upheld the decision of CIT(A) and dismissed the appeal on this ground.
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