The Tax Publishers2021 TaxPub(DT) 6507 (Del-Trib)

INCOME TAX ACT, 1961

Section 36(1)(va) 2(24)(x)

No disallowance under section 36(1)(va) read with section 2(24)(x) can be made if employees' contribution to PF and ESI are deposited after the due date prescribed under the relevant Acts, but, paid before the due date of filing of return. Where assessee, in instant case, admittedly, deposited the employees' contribution to PF and ESI before the due date of filing of the return of income; the disallowance made under section 36(1)(v) was liable to be deleted.

Business deduction under section 36(1)(va) - Employees' contributions to ESI and PF - Paid before due date of filing of return under section 139(1) -

Assessee-company filed its return of income, which was processed at CPC by making an addition on account of late deposit of employees' contributions of PF and ESI under section 36(1)(va). Before CIT(A), the assessee submitted that said addition was not justified since it deposited the employees' contributions to PF and ESI before due date of filing of return of income. However, the CIT(A) held that the assessee was not entitled to deduction under section 36(1)(va) due to failure on its part in depositing the employees' contributions on or before the due dates. Held: The High Court in the case of Pr. CIT-7 v. Pro. Interactive Service (India) (P) Ltd. [ITA No. 983/2018,Order, dated 10-9-2018], held that 'the legislative intent was/is to ensure that the amount paid is allowed as an expenditure only when payment is actually made. It was further held that legislative intent and objective is not to treat belated payment of Employees Provident Fund and Employees State Insurance Scheme as deemed income of the employer under the Act. Further, following the said decision of the High Court, the Coordinate Bench of Tribunal in the case of Dy. CIT Circle-7 (1), New Delhi v. Dee Development Engineers Ltd. [ITA 4959/DEL/2016, Order dated 8-4-2021] : 2021 TaxPub(DT) 2025 (Del-Trib), held that no disallowance under section 36(1)(v) read with section 2(24)(x) can be made if employees' contribution to PF and ESI are deposited after the due date prescribed under the relevant Acts, but, paid before the due date of filing of return. Since the assessee, in instant case, admittedly, deposited the employees' contributions to PF and ESI before the due date of filing of the return of income; the disallowance made under section 36(1)(v) was accordingly, deleted.

Followed:Pr. CIT-7 v. Pro Interactive Service (India) (P) Ltd. [ITA No. 983/2018,Order, dated 10-9-2018] and Dy. CIT Circle-7 (1), New Delhi v. Dee Development Engineers Ltd. [ITA 4959/DEL/2016, Order dated 8-4-2021] : 2021 TaxPub(DT) 2025 (Del-Trib)

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2007-08



IN THE ITAT, DELHI BENCH

SUBSCRIBE TaxPublishers.inSUBSCRIBE FOR FULL CONTENT

TaxPublishers.in

'Kedarnath', 7, Avadh Vihar, Near Nirali Dhani,

Chopasni Road

Jodhpur - 342 008 (Rajasthan) INDIA

Phones : 9785602619 (11 am - 5 pm)

E-Mail : mail@taxpublishers.in / mail.taxpublishers@gmail.com