Prime Comfort Products Pvt. Ltd. Vs ACIT (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi, considered an appeal challenging the disallowance of Rs. 21,13,137 claimed as deduction towards delayed payment of employees’ contribution to Provident Fund (PF) and Employees’ State Insurance (ESI) for assessment year 2020–21. During processing of the return, the Centralized Processing Centre (CPC) observed that the assessee had claimed deduction despite not depositing such contributions within the prescribed time. Accordingly, an adjustment was made under Section 143(1), and the disallowance was upheld by the National Faceless Appeal Centre (NFAC).
Before the Tribunal, the assessee argued that such disallowance could not be made through adjustment under Section 143(1), as it did not fall within its scope. It was also contended that the deduction should be allowed if payment was made before the due date of filing the return, or alternatively under Section 37(1). The assessee further argued that the due date should be determined based on the date of salary payment.
The Tribunal rejected the contention that payment before the due date of return filing would make the deduction allowable, relying on the Supreme Court ruling in Checkmate Services Pvt. Ltd., which held that employees’ contributions must be deposited within the due dates prescribed under the relevant statutes, failing which they are treated as income under Section 36(1)(va) read with Section 2(24)(x). The Tribunal also rejected the argument regarding allowability under Section 37(1), noting that the cited decision did not establish such a principle. Further, it held that such adjustment under Section 143(1) was permissible.
