CIT, Udaipur Vs Udaipur Dugdh Utpadak Sahakari Sangh Limited (Rajasthan High Court)
While completing the assessment under Section 143(3) of the Income Tax Act, 1961 the Assessing Officer (AO) noticed that the assessee had deposited payment of Rs.14,60,412/- in the PF fund and Rs.973/- in the ESI fund with delay that is the said payments were deposited after the due dates i.e. after 15th next month and, therefore, added the said amount to the income of the assessee as per the provisions of Section 36(1)(va) read with Section 2(24)(x) of the Act.
Aggrieved by the assessment order dated 26.12.2008, the assessee filed an appeal before the CIT(A), who, vide its appellate order dated 15.03.2010 after noticing certain judgments came to the conclusion that it is a settled position of law that where payments on account of contribution to the PF, ESI etc. are made within the due date of filing the return, such deductions are allowable. It was further noticed that it was not in dispute that the PF contribution and ESI was deposited by the appellant before the due date of filing the return and, consequently, the CIT(A) deleted the dis-allowance made by the AO and granted a relief of Rs.14,61,385/-.
ITAT by its order dated 16.12.2011 upheld the order passed by the CIT(A) on the said issue, inter alia, holding that the employees’ contribution is allowable, if the same is paid before the due date of return.
Hon’ble Supreme Court in Vinay Cement (supra), the Delhi High Court in Commissioner of Income-Tax v. AIMIL Ltd : (2010) 321 ITR 508 (Delhi) held at page 518 as under:-
“We may only add that if the employees’ contribution is not deposited by the due date pres cribed under the relevant Acts and is deposited late, the employer not only pays interest on delayed payment but can incur penalties also, for which specific provisions are made in the Provident Fund Act as well as the ESI Act. Therefore, the Act permits the employer to make the deposit with some delays, subject to the aforesaid consequences. In so far as the Income-tax Act is concerned, the assessee can get the benefit if the actual payment is made before the return is filed, as per the principle laid down by the Supreme Court in Vinay Cement (2009) 313 ITR (St.) 1.”
In view of the settled legal position, the appeal preferred by the Revenue has no substance and the same is, therefore, dismissed. No costs.
Also Read: Delayed payment of employees contribution towards PF/ESIC not allowable: SC
