Delayed payment of employee’s contribution to PF & ESI adjustable u/s 143(1)

Salasar Balaji Ship Breakers Pvt. Ltd. Vs ACIT (ITAT Mumbai)

ITAT Mumbai held that payment of employee’s contribution to PF & ESI beyond the due dates is not allowable as deduction. Accordingly, the same is an incorrect claim and therefore it falls within the scope of prima facie adjustment u/s 143(1) of the Income Tax Act.

Facts- The only issue here is whether, employees’ contribution of PF & ESI which has not been deposited before the due date under the relevant acts and regulations, can it be treated as deemed income u/s. 2(24)(x) r.w.s. 36(1)(va).

Conclusion- We confirm the order of the ld. CIT (A) holding that once the Hon’ble Apex Court has settled the issue, then that is the law which is applicable retrospectively and therefore, any such claim of payment on account of employees’ contribution to PF & ESI beyond the due dates given in the respective acts as given in 36(1)(va) is incorrect claim which needs to be disallowed / adjusted even within the scope of prima facie dispute u/s. 143(1). Therefore, disallowance has rightly been made by CPC, Bangalore.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

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