Bellur Hiriyaniah Sridhar Murthy Vs ITO (ITAT Bangalore)
PF & ESI Due Date – Tribunal Sends Back Case for Fresh Look- Checkmate Applied, Yet ITAT Bangalore Grants One More Chance Employees’ Contribution Dispute
Bangalore ITAT dealt with the recurring controversy surrounding disallowance of employees’ PF/ESI contributions u/s 36(1)(va).
Assessee filed return declaring income of ₹1.84 crore. CPC, while processing u/s 143(1), made an addition of ₹2,01,794 towards belated remittance of employees’ share of PF/ESI. On appeal, CIT(A) confirmed the addition relying on Checkmate Services Pvt. Ltd Case (SC).
Before the Tribunal, Assessee argued that the due date should be computed from the actual date of disbursement of salary, because unless salary is paid, no deduction towards PF/ESI can be made. Salaries for certain months (June, Aug, Sept, Dec 2019 & Jan, Mar 2020) were disbursed in subsequent months & contributions were remitted within the statutory timeline reckoned from such disbursement. Reliance was placed on ITAT Bangalore in MTR Maiya’s (ITA No.95/Bang/2023 dt. 02.05.2023) which remanded similar matter. ITAT Calcutta in Kanoi Papers & Industries Ltd. [2002] 75 TTJ 448, held that “month” means month of actual salary disbursement. ITAT Delhi in Sai Computers Ltd. [2023] 155 taxmann.com 607, also remanded issue post Checkmate Services. It was submitted that out of total addition of ₹23.13 lakh, a major portion of ₹22.70 lakh was deposited within due dates if reckoned properly. Assessee further invoked Article 265 of Constitution & CBDT Instruction No.14 of 1955 to argue against excessive taxation.
