Case Law Details
Cognizant Technology Solutions India Pvt. Ltd. Vs ACIT (ITAT Chennai)
In a significant judgment, the Income Tax Appellate Tribunal (ITAT) Chennai ruled in the case of Cognizant Technology Solutions India Pvt Ltd Vs ACIT that late payment of Employee’s Provident Fund (EPF) and Employee’s State Insurance (ESI) contributions could not be claimed alternatively under Section 37(1) of the Income Tax Act. The Tribunal stated that the provisions of Section 37(1) were residuary and that any expenditure that fell within the ambit of sections 30 to 36 could not be claimed alternatively under this provision.
The primary concern in this case was the disallowance made by the Assessing Officer (AO) under sections 36(v)(a) and 2(24)(x) for late payment of EPF and ESI contributions, amounting to Rs.79.47 Lacs. The ITAT Chennai, while adjudicating on this matter, took note of a previous Supreme Court ruling in Checkmate Services P. Ltd. Vs CIT, which had decided on a similar issue.
Cognizant’s counsel referenced a previous decision by the Cuttack Bench of the Tribunal in ACIT vs. Sunila Sahu, where the matter had been restored to the lower authorities to examine the claim alternatively under section 37(1). However, the Tribunal rejected this argument, maintaining that the disallowance was covered specifically under Section 36(1)(va) and could not be claimed alternatively under the residuary Section 37(1).
FULL TEXT OF THE ORDER OF ITAT CHENNAI
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