Creative Textile Mills Vs DCIT CPC (ITAT Mumbai)
PF contribution should be remitted within 15 days from close of month for which employees earned their salary
ITAT Mumbai clarifies that both employee and employer contributions to the Provident Fund must be remitted within 15 days from the close of the month in which employees earned their salary. The tribunal refers to a precedent from the Madras High Court, emphasizing that the term “every month” in the Provident Fund Scheme should be interpreted as the month in which wages were actually earned, i.e., the month of salary payable.
Facts- The appellant vide the present appeal has mainly contested that CIT(A) has erred in confirming the disallowance of Rs. 10,09,648/- being belated payment of PF/ ESIC u/s 36(1)(va) of the Income Tax Act.
It is submitted that as per the clause 38 of the Provident Fund Scheme, the employee’s contribution to the provident fund is required to be deposited 15 days from the close of every month. Also submitted that the term “every month” under the clause 38 of the employee’s provident fund scheme 1952 should be read as the month of payment of the salary, which is a month subsequent to the month for which salary was paid.
Conclusion- Hon’ble Madras High Court in the case of the Commissioner of Income-tax v. Madras Radiators & Pressing Ltd. has held that the term “every month” in clause 58 of the Provident Fund Scheme should be read as month in which the wages were actually earned i.e. salary payable.
Hence the one and only reasonable conclusion is that the employer has to remit both the contributions to the Provident Fund within 15 days from the close of the month for which the employees earned their salary i.e., Salary payable.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal by the assessee is directed against order dated 23.08.2021 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2018-19. The appeal was originally adjudicated on 20.05.2022, however subsequently on the Miscellaneous Application filed by the Revenue, the appeal has been recalled by the order of the Tribunal dated 13.04.2023 passed in MA No. 405/Mum/2022, and thus this appeal came before us for hearing. The grounds raised by the assessee are reproduced as under:
