Rakesh Janghu Vs DCIT (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi, adjudicated multiple appeals and cross-objections concerning disallowance of employees’ contribution to Provident Fund (PF) and Employees’ State Insurance (ESI) under Section 36(1)(va) of the Income Tax Act across different assessment years. The assessee challenged adjustments made under Section 143(1), contending that such disallowances, amounting to substantial sums, were beyond the scope of prima facie adjustments and involved debatable issues. It was further argued that contributions, though deposited after the due date under the relevant statutes, were made before the due date of filing the return and should therefore be allowed. The assessee also disputed reliance on amended provisions and judicial precedents being applied retrospectively.
The Revenue, on the other hand, contested deletion of disallowances, asserting that contributions not deposited within the statutory due dates under PF/ESI laws were not allowable deductions. Both sides acknowledged that the issue stood covered by the Supreme Court ruling in the case of Checkmate Services Pvt. Ltd., which held that employees’ contributions deposited beyond the prescribed due dates under relevant statutes are not deductible under Section 36(1)(va).
The Tribunal noted that the central dispute pertained to determining the “due date” for deposit of contributions. The assessee argued that since salaries were paid in the subsequent month, the due date should be computed from the month of actual payment of wages, allowing deposit within 15 days from the end of that month. In contrast, the Revenue maintained that the due date should be calculated from the month to which the salary relates. The Tribunal examined precedents, including decisions suggesting that the relevant month could be interpreted as the month of salary disbursement, and not necessarily the month for which wages are due.
