Case Law Details
Prolific HR Consultants (India) Ltd. Vs DCIT (ITAT Bangalore)
Introduction: The case of “Prolific HR Consultants (India) Ltd. vs DCIT” involves an appeal to the ITAT Bangalore against the disallowance of an employer’s contribution to PF due to a delay in payment during the COVID-19 pandemic. The petitioner sought to claim full deduction for the delayed payment based on exceptional circumstances caused by the pandemic.
Analysis: The appeal revolves around the disallowance of an employer’s contribution to the Provident Fund (PF) due to a delay in payment beyond the specified due date. The petitioner argued that the delay should be condoned considering the unprecedented situation created by the COVID-19 pandemic and the circulars issued by PF authorities to extend the due date.
However, the ITAT’s decision was based on the Supreme Court’s ruling in the “Checkmate Services P Ltd. vs CIT-1” case, which clarified that employer’s and employee’s contributions to PF are treated differently under the Income Tax Act. While the delay in employee’s contribution permanently negates the employer’s claim for deduction, the delay in employer’s contribution only results in the deferment of deduction under Section 43B.
The ITAT acknowledged the petitioner’s argument regarding the pandemic but highlighted that no exemption or relief was specifically granted by the government in this regard.
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