INCOME TAX ACT, 1961

Sections 36(1)(va) and 2(24)(x)

Business deduction under section 36(1)(va) - Employees' contributions to PF and ESI - Deposited after due date -

Assessee-company was engaged in business of manufacturing of fabrication of Pipe System and Pipe Fitting, Generation of power through Bio-Mass Technology. AO made addition on account of late deposit of employees' contribution of PF and ESI. CIT(A) deleted the said addition. Aggrieved, Revenue was in appeal. Assessee submitted that the employees' contribution towards PF and ESI was deposited after due date but before filing of return of income, thus, no disallowance was required to be made in that regard. Held:It was undisputed that assessee did not deposit employees' contribution towards PF and ESI within the due date prescribed under the said statutes, i.e., PF and ESI. In view of decision of High Court in the case of Pr. CIT-7 v. Pro Interactive Service (India) (P) Ltd. ITA No. 983/2018 pronounced on 10-9-2018, the legislative intent was/is to ensure that the amount paid is allowed as expenditure only when payment is actually made and that the legislative intent does not treat belated payment of PF and ESI as deemed income of employer under section 2(24)(x). Hence, CIT(A) was justified in deleting the addition made on account of late deposit of employees' contribution towards PF and ESI.

Followed:Pr. CIT v. Pro Interactive Service (India) (P) Ltd. ITA No. 983/2018 Order date 10-9-2018

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2011-12

INCOME TAX ACT, 1961

Section 37(1)

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