Yes Bank Limited Vs ACIT (Appeals) (ITAT Mumbai)
Income Tax Appellate Tribunal (ITAT) Mumbai Bench recently ruled that employee contributions to Provident Fund (PF) and Employees’ State Insurance (ESI) are not deductible if deposited beyond the statutory due dates prescribed by their respective Acts, even if these payments are made before the due date for filing the income tax return. This decision, in the case of Yes Bank Limited vs. ACIT (Appeals), aligns with a definitive Supreme Court judgment on the matter.
The dispute arose during the processing of Yes Bank’s income tax return for the Assessment Year 2020-21. The Centralized Processing Centre (CPC) disallowed an amount of Rs. 9,75,96,266 under Section 36(1)(va) of the Income-tax Act, 1961, citing delays in depositing employee contributions to PF and ESI. Additionally, a disallowance of Rs. 30 crore was made under Section 43B for a contribution to an approved gratuity fund. Yes Bank had contended that the delay in PF/ESI payments was due to a moratorium imposed by the Reserve Bank of India (RBI) from March 5 to March 18, 2020, which restricted the bank’s operations. The bank argued that the payments were made immediately after the moratorium was lifted and before the due date for filing the income tax return.
