Case Law Details
Ms.Unifac Management Services (India) Vs DCIT (Madras high Court)
Conclusion: Employees contribution towards EPF and ESI was rightly disallowed by AO as payment was made beyond the due date stipulated under the relevant enactment for making such payment u/s 36(1)(va).
Held: In the present case, AO made disallowance of a sum paid by the assessee as employees contribution towards EPF and ESI, on the reason that such payment was made beyond the due date stipulated under the relevant enactment for making such payment. Assessee contended that since payment was made before filing the return, even though beyond the due date stipulated under the relevant enactment, assessee was entitled for deduction of such payment in view of amendment brought to Section 43B. AO however, contended that assessee was not entitled to take shelter under Section 43B, which pertains to “employer’s contribution” and on the other hand, the assessee’s case would fall only under the purview of Section 36(1)(va), which specifically deals with “employees contribution” . It was held the scope of Section 43B and Section 36(1)(va) are different and thus, there is no question of reading both provisions together to consider as to whether the assessee was entitled to deduction in respect of the sum belatedly paid towards such contribution, especially when such sum was received by assessee/employer from his employee. Therefore, application of Section 36(1)(va) read with Section 2(24)(x) alone was the proper course and any other interpretation would only defeat the object and scope of both the provisions viz., 43B and 36(1)(va).
The petitioner is aggrieved against the assessment order of the respondent passed under Section 143(3) of the Income Tax Act dated 29.06.2017 and consequential letter of the respondent dated 16.02.2018.
2. The case of the petitioner is as follows:
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What is payable, Both part of the contribution fund amount become payable on the date on which the salary is paid. The liability to pay, both the contributions employee as well as employer is on the employer. Therefore, any sum payable by the assessee as an employer by way of contribution to any provident fund provided in section 43B(b) means the contribution to provident fund if any payable by the assessee whether it is employees contribution or employer’s, both covered by the provisions of section 43B of the Act and allowable if paid on or before the due date of furnishing of return provided u/s 139(1) of the Act. Secondly the amount pertains to period falls within the period year under consideration if paid within the period year under consideration i.e. not shown as payable in financial of the year cannot be said to be payable withing the meaning of section 37 r.w.s. 28 of the Act.
Thus, I think the Hon’ble Court while observing that “I am not in agreement with the other decisions rendered by the High Courts of Karnataka, Punjab and Haryana and Allahabad, which in my view, did not consider the distinction of the scope and ambit of Section 36(1)(va) and Section 43B” has failed to the understand true intention of the legislative provided in section 43B of the Act made made a mistake by not accepting the aforementioned decisions findings
The payment made before filling the return should be allowed.As this is not finally kept by the employer. it may attract interest and penalty . Which is also imposed by the department and if it is added to the income is not justify at all.
It appears that the dismissal of SLP 3951/2017 by Honourable Supreme Court on 23/02/2017 against final judgment and order dated 26/05/2016 in DBITA No. 66/2015 passed by the Honourable High Court of Rajasthan at
Jaipur) in the case of PRINCIPAL COMMISSIONER OF INCOME TAX-II, JAIPUR VERSUS
M/S. RAJASTHAN STATE BEVERAGES CORPORATION LTD. was not brought to the knowledge of the Honourable High Court otherwise the decision would have been in favour of the assessee. The assessee must take it up.