16-Day Delay in Employees Provident Fund Deposit u/s 36(1)(va) Due to COVID-19 Lockdown: Karnataka HC allows Deduction [Read Order]
While the CIT(A) and ITAT had rejected the claim following the Supreme Court’s Checkmate Services judgment, the court noted that the delay was beyond the assessee’s control and that deposits had been regular otherwise.
Provident Fund Deposit - COVID-19 Lockdown - Deduction - Taxscan
Provident Fund Deposit - COVID-19 Lockdown - Deduction - Taxscan
The High Court of Karnataka, allowed a deduction under Section 36(1)(va) of Income Tax Act,1961,for a 16-day delay in depositing Employees’ Provident Fund by the assessee due to the COVID-19 lockdown.
Prolific HR Consultants (India) Ltd,appellant-assessee, filed its income tax return for AY 2021-22. It deposited the Employees’ Contribution to Provident Fund late on 01.06.2020, missing the 15.05.2020 deadline, and its deduction claim under Section 36(1)(va) was rejected.
The assessee’s appeal to the Commissioner of Income Tax (Appeals) [CIT(A)] was dismissed following the Supreme Court’s Checkmate Services judgment, and the Tribunal upheld the disallowance in the impugned order.
The assessee counsel, submitted that the Provident Fund contribution due on 15.05.2020 was deposited late on 01.06.2020 due to the COVID-19 lockdown. He noted that the assessee had been regular in deposits otherwise and that the Employees’ Provident Fund Organisation had directed no action for delays during the pandemic. He also relied on a similar Income Tax Appellate Tribunal (ITAT) order where deduction under Section 36(1)(va) was allowed and sought the same relief.
The respondents’ counsel, argued that the disallowance followed the Supreme Court’s Checkmate Services P. Ltd. judgment and that Section 36(1)(va) did not allow exceptions, so the Tribunal’s order was justified.
Justice S.G Pandit and Justice K.V Aravind noted that the assessee did not dispute the Supreme Court’s Checkmate Services P. Ltd. ruling but explained that the 16-day delay in depositing the Provident Fund contribution, due on 15.05.2020 and paid on 01.06.2020, was caused by the COVID-19 lockdown and was beyond the assessee’s control. It also noted that the assessee had been regular in deposits otherwise.
Considering these circumstances, the court directed the Assessing Officer to allow the deduction under Section 36(1)(va) for the delayed deposit, clarifying that this decision was limited to the facts of the case. The appeal was allowed in part, the ITAT’s order dated 18.07.2023 was set aside, and no costs were imposed.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
