ITAT allows S.36(1)(va) Deduction claimed for Employee’s Contribution towards EPF & ESIC remitted belatedly but before Return Filing Due Date [Read Order]
ITAT Raipur allows Deduction for Employee’s EPF and ESIC Deposits Made Before Return Filing Due Date
ITAT, ESIC, EPF
ITAT, ESIC, EPF
The Income Tax Appellate Tribunal, Raipur Bench, has allowed the deduction claimed by Shree Shivam Attires Pvt. Ltd. towards employees’ contribution to the Employees’ Provident Fund (EPF) and Employees’ State Insurance Corporation (ESIC) that had been deposited belatedly but before the due date of filing the income tax return under Section 139(1) of the Income Tax Act, 1961.
The matter reached the Tribunal after the Chhattisgarh High Court remanded it for a decision on merits, noting that the earlier ITAT order had only ruled on maintainability under Section 154 and not the substantive claim.
The Bench comprising Arun Khodpia (Accountant Member) and Ravish Sood (Judicial Member) was hearing the company’s appeal for AY 2018–19 against the order of the National Faceless Appeal Centre (NFAC) confirming disallowance under Section 36(1)(va) read with Section 43B. The disallowance of ₹25.81 lakh had been made on the ground that employees’ contributions were not deposited within the due dates prescribed under the respective welfare statutes.
Before the Tribunal, the assessee argued that as the payments were made prior to filing the return, the deduction should be allowed in line with earlier decisions and that disallowance through intimation under Section 143(1) was beyond CPC’s jurisdiction since the issue was debatable.
The Revenue, however, relied upon the Checkmate Services Pvt. Ltd. (2022) Supreme Court ruling and the Chhattisgarh High Court’s decision in BPS Infrastructure v. ITO (2024), which had applied Checkmate to similar facts.
The Tribunal noted that Checkmate had conclusively distinguished between employers’ and employee’s contributions, clarifying that employee contributions must be deposited within the statutory due dates and not merely before the return filing date.
However, the Tribunal also noted that the assessee’s payments were not retained indefinitely and were made before return filing.
Holding that the disallowance of such payments made before filing of return could not be sustained in view of the Chhattisgarh High Court’s directions and the facts of timely deposit prior to return filing, the ITAT allowed the deduction claimed under Section 36(1)(va) of the Income Tax Act.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
