ITAT Disallows Income Tax Deduction On Employees’ Contribution To PF & ESI Beyond The Due Dates

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has disallowed income tax deduction on employees’ contributions to PF and ESI beyond the due dates.

The bench of Amit Shukla (Judicial Member) and Prashant Maharishi (Accountant Member) has observed that the auditor in the audited accounts only pointed out the date of payment and the due date prescribed under the PF and ESI Act, and it is incumbent upon the assessee that, while computing the income, he has to disallow the said payment if it has been made beyond the due date.

The assessee company e-filed the Return of Income for the AY 2018-19 on August 16, 2018, declaring a total income of Rs. 1,61,50,980/-. The return was processed at a total income of Rs 1,62,51,220 as against an income of Rs 1,61,50,980 declared in the return of income, with an addition of Rs 1,00,240 on account of the disallowance of late payment of PF and ESI.

The CIT(A) has held that the due dates mentioned in Section 36(1)(va) and 43B regarding deemed trust income have to be deposited by the due dates as per the welfare acts, and that was always the intention of the legislature while enacting the provisions.

The tribunal noted that employees’ contributions to PF and ESI have been made late and beyond the due date prescribed under the welfare acts.

The tribunal upheld the disallowance made by the CIT (A).

Case Title: M/s. Salasar Balaji Vs. ACIT

Citation: ITA No.1947/Mum/2021

Date: 12/04/2023

Counsel For Appellant: C.V. Jain

Counsel For Respondent: Richa Gulati

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