Case Law Details
As soon as employees’ contribution towards PF or ESI is received by the assessee by way of deduction or otherwise from the salary/wages of the employees, it will be treated as ‘income’ at the hands of the assessee. It clearly follows there from that If the assessee does not deposit this contribution with PF/ESI authorities, it will be taxed as Income at the hands of the assessee. However, on making deposit with the concerned authorities, the assessee becomes entitled to deduction under the provisions of s. 36(1)(va). Sec. 43B(b), however, stipulates that such deduction would be permissible only on actual payment. This is the scheme of the Act for making an assessee entitled to get deduction from Income insofar as employees’ contribution is concerned. Deletion of the second proviso has been treated as retrospective in nature and would not apply at all. The case is to be governed with the application of the first proviso. If the employees’ contribution is not deposited by the due date prescribed under the relevant Acts and is deposited late, the employer not only pays interest on delayed payment but can incur penalties also, for which specific provisions are made in the Provident Fund Act as well as the ESI Act. Therefore, the Acts permit the employer to make the deposit with some delays, subject to the aforesaid sequences. Insofar as the IT Act is concerned, the assessee can get the benefit if the actual payment is made before the return is filed. CIT vs.Vinay Cement Ltd., (2007) 213 CTR (SC) 268, CIT vs. Dharmendra Sharma (2007) 213 CTR (Del) 609: (2008) 297 ITR 320 (Del) and CIT vs. P.M. Electronics Ltd. (2008) 220 CTR (Del) 635 : (2008) 15 DTR (Del) 258 followed.
In view of the decision, the deduction of payment of employees’ contribution towards provident fund and ESI cannot be disallowed under section 43B, if paid before the due date of filing the return. In view of this fact, this ground of appeal of the revenue is dismissed.
INCOME TAX APPELLATE TRIBUNAL, DELHI
ITA Nos.2777 to 2781/Del./2010
(Assessment Years: 1999-00, 2000-01, 2001-02, 2003-04, 2004-05)
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Sir, hence if a assessee deposit provident fund amount after due date of PF Act and ESI act but before the due date of filling of return u/s 139(1) ,Assessed will be liable for deduction U/s 36(1)(Va) of i tax -AY 2017-18
Since in Section 36(1)(Va) , due date means date of PF act and ESI act. The order of high court in AIMIL and kichha sugar Co Ltd will be in force. And while making tax audit these judgements are considered.
Sir, hence if a assessee deposit provident fund amount after due date of PF Act and ESI act but before the due date of filling of return u/s 139(1) ,Assessed will be liable for deduction U/s 36(1)(Va) of i tax -AY 2017-18
Good Judgement .
CA. Subhash Chandra Podder , FCA
Kolkata
08/08/2012
The correctness of the decision to the extent it relates to beleted payment of Employees’ contribution to PF, is very much doubtful, for
1) it overlooks S.2 (24) (x) which provides that Income includes, “any sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set up under the provisions of the Employees’ State Insurance Act, 1948 (34 of 1948), or any other fund for the welfare of such employees” ;
2) it overlooks the clear distinction between belated payments of the Employer’s own contribution, and of the Employees’ Contribution.
For a more detailed and acceptable discussion, see THE INCOME TAX APPELLATE TRIBUNAL BENCH ‘B’ KOLKATA decision in ITA No.1255/Kol/2010- Assessment Year: 2007-2008 -DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, KOLKATA Vs M/s ASHIKA STOCK BROKING LTD PAN NO:AACCA7156Q C.O.No. 112(Kol)/2010; ITA No.1255(Kol)/2010