Setback to Deutsche India: ITAT confirms Disallowance on Delayed Payment of Employee’s Contribution to Provident Fund [Read Order]

In a major setback to Deutsche India Pvt Ltd, the appellant, Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ), confirmed the disallowance on delayed payment of the employee’s contribution to the provident fund.

The present appeal has been filed by the assessee challenging the impugned order passed under section 250 of the Income Tax Act, 1961 by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, for the assessment year 2020-21.

The assessee filed its return of income declaring a total income of Rs.459 crores The said return was processed under section 143(1) of the Income Tax Act, computing the total income of the assessee at Rs.465 crores after making an addition on account of delayed payment towards employee’s contribution to provident fund under section 36(1)(va) of the Income Tax Act.

The CIT(A) dismissed the appeal filed by the assessee on this issue and held that if the employer fails to deposit the entire amount towards employees’ contribution on account of the provident fund with the concerned department on or before the due date under the relevant statute, the assessee shall not be entitled to a deduction to that extent.

The only grievance of the assessee is against disallowance on account of a delayed payment of the employee’s contribution to the provident fund under section 36(1)(va) of the Income Tax Act.

The Authorised Representative placed reliance upon the decision of the coordinate bench of the Tribunal in P.R. Packaging Service vs ACIT and submitted that even after the decision of the Supreme Court in Checkmate Services (P.) Ltd. vs CIT, no disallowance under section 36(1)(va) can be made vide intimation under section 143(1)(a) of the Income Tax Act.

The Departmental Representative vehemently relied upon the decision of the Supreme Court in Checkmate Services (P.) Ltd and submitted that this issue is no longer res integra and has been decided in favour of the Revenue.

The Bench consisting of Om Prakash Kant, Accountant Member and Sandeep Singh Karhail, Judicial Member observed that “Respectfully following the decision of the Supreme Court in Checkmate Services (P.) Ltd, we find no infirmity in the impugned order passed by the CIT(A).”

To Read the full text of the Order CLICK HERE

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