Ven Singh Vs ITO (ITAT Ahmedabad)
ITAT Ahmedabad held that disallowances on account of excess contribution to PF deleted since the same didn’t exceed 27% of the salary and wages in terms of rule 87 of the Income Tax Rules. Accordingly, appeal allowed to that extent.
Facts- Vide the present appeal, the appellant has contested the disallowance of PF expenses. It was pointed out that same pertained to the contribution to PF made by the assessee as employer, which the AO found exceeded the statutory limit of 27% of the salary, and hence, excess was held liable to be disallowed in terms of Rule 87 of the Income Tax Rules, 1962 resulting disallowance of Rs.4,78,966/-.
Conclusion- Held that the PF contribution had been made on the components of both the salary and the wages paid, and that, being a labour contractor, he has deducted the PF even on labour wage components which did not exceed 27% of the salary & wages; that both the AO and the ld.CIT(A) had completely ignored the submissions of the assessee and went on to make disallowance of PF expenses on an incorrect factual premise. Thus, disallowance of Rs.4,78,966/-made on account of excess contribution to PF by the assessee in terms of Rule 87 of the Income Tax Rules, 1962 be deleted.
