Sunday or Holiday Extends EPF and ESIC Payment Due Date: ITAT Delhi

G.D. Foods and Manufacturing (India) Pvt. Ltd. Vs Assistant Director of Income Tax (ITAT Delhi)

Summary: ITAT Delhi partly allowed the appeal of G.D. Foods and Manufacturing (India) Pvt. Ltd. for AY 2019-20 and deleted disallowance of employees’ contributions towards EPF and ESIC where the contributions were deposited one day after the prescribed due dates because those dates fell on a Sunday or gazetted holiday. The assessee’s return had been processed under section 143(1), with business income increased by Rs.26,44,255/-, comprising disallowance of Rs.26,42,189/- towards delayed employees’ PF and ESI contributions and Rs.2,066/- towards profit on sale of fixed assets. CIT(A) upheld the PF/ESI disallowance, while remanding the fixed-asset issue to the Assessing Officer.

Before the Tribunal, the assessee accepted that the general controversy regarding employees’ contributions deposited beyond the due dates prescribed under the respective welfare enactments had been settled by the Supreme Court in Checkmate Services Pvt. Ltd. vs. CIT-1, which held that delayed employees’ EPF/ESIC contributions beyond the statutory due dates are not allowable. The assessee therefore restricted its challenge to ESIC contributions of Rs.3,89,086/- and EPF contributions of Rs.15,47,915/-, for which the statutory due dates fell either on Sunday or a gazetted holiday and payment was made on the immediately succeeding day.