Prolific HR Consultants (India) Ltd. Vs ADIT (CPC) (Karnataka High Court)
Conclusion: Deduction under Section 36(1)(va) was allowable for a 16-day delay in depositing Employees’ Provident Fund by the assessee as delay was attributable due to the lockdown consequent upon the COVID-19 pandemic.
Held: Assessee, filed its income tax return for AY 2021-22. It deposited the Employees’ Contribution to Provident Fund late on 01.06.2020, missing the 15.05.2020 deadline, and its deduction claim under Section 36(1)(va) was rejected. Employees’ Contribution to PF (due 15.05.2020) was deposited on 01.06.2020. Deduction under Section 36(1)(va) was disallowed in intimation u/s 143(1). CIT(A) and ITAT upheld disallowance relying on SC ruling in Checkmate Services P. Ltd. v. CIT (12.10.2022). Assessee contended delay was solely due to COVID-19 lockdown, relying on EPFO circular (15.05.2020) and ITAT Mumbai ruling in ITA No.1965/MUM/2024 (identical issue for April 2020). It was held that assessee did not dispute the Supreme Court’s Checkmate Services P. Ltd. ruling but explained that the 16-day delay in depositing the Provident Fund contribution, due on 15.05.2020 and paid on 01.06.2020, was caused by the COVID-19 lockdown and was beyond assessee’s control. It also noted that assessee had been regular in deposits otherwise. Considering these circumstances, the Court directed AO to allow the deduction under Section 36(1)(va) for the delayed deposit, clarifying that this decision was limited to the facts of the case. The appeal was allowed in part, the ITAT’s order dated 18.07.2023 was set aside, and no costs were imposed.
