Woodland (Aero Club) Private Limited Vs ACIT (Delhi High Court)
Delhi High Court held that employees contribution to Employees Provident Fund [EPF] or Employees State Insurance [ESI] is to be made on or before statutory due date set out in respective EPF/ESI Act. Accordingly, order of ITAT disallowing deduction u/s. 36(1)(va) of the Income Tax Act justified.
Also Read: SC Issues Notice on Late PF/ESI Deposit Deduction Dispute
Facts-
The appellant is a Partnership Firm engaged in the business of manufacturing, supply and export of leather products like leather shoes, leather garments under the name of Woodland. The return of the appellant was processed and income was enhanced by an amount of ₹4,14,22,293/-, thereby disallowing the deduction of the disputed amount u/s. 36(1) (va) of the Act.
Notably, CIT(A), NFAC order dated 05.08.2022 allowed the appeal holding that employees’ contribution deposited before the due date under Section 139(1) was allowable. ITAT order dated 09.01.2023 allowed the appeal of the Revenue, restoring the disallowance based on the Supreme Court’s decision in Checkmate Services (P) Ltd.
Conclusion-
Held that it is clear from the observations of the Supreme Court that while examining the issue whether for the benefit of deductions to be made available to the assessee, the employees’ contributions have to be deposited on or before the due date, there was no occasion to even consider Explanation 5 to Section 43B of the Act. As such, the plea of sub silentio, is totally misplaced. The ITAT is justified in relying upon Checkmate Services (P) Ltd. while dismissing the appeal filed by the appellant. Thus, it is held the ITAT is justified in passing the order dated 09.01.2023. We find no infirmity in the same. The first question of law is decided against the appellant.
