Case Law Details
Kothari Wheels Vs DCIT (ITAT Pune)
Introduction: The appeal filed by Kothari Wheels against the order of the CIT(A) regarding the disallowance of late deposit of Employees’ share of PF and ESIC has been upheld by ITAT Pune. Here’s a detailed analysis of the case.
Detailed Analysis: During the assessment year 2018-19, the CPC, Bengaluru made a disallowance of Rs. 93,37,905/- due to the late deposit of employees’ share of PF and ESIC by Kothari Wheels. This disallowance was confirmed by the CIT(A), leading to the appeal before ITAT Pune.
The crux of the matter revolved around the interpretation of Section 36(1)(va) of the Income Tax Act, 1961, which requires employers to deposit employees’ contributions to PF and ESIC within the prescribed time under respective statutes. Kothari Wheels argued that since the payments were made before the due date for filing the return of income under Section 139(1) of the Act, disallowance should not apply.
However, ITAT Pune, referring to a similar case precedent, ruled that the deduction under Section 36(1)(va) can only be claimed if the employees’ share is deposited before the due date stipulated in the respective Acts. Despite Kothari Wheels’ contention that the adjustment made by the CPC under Section 143(1) was beyond the scope of the provision, ITAT Pune upheld the disallowance, stating that the CPC cannot go beyond the return of income and accompanying documents.
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