Contribution Collected From Employees If Not Deposited Within Due Dates Prescribed As Per PF & ESIC Act, Is Dis-Allowable: Mumbai ITAT
Pankaj Bajpai
12 March 2024 6:45 PM IST
The Mumbai ITAT recently clarified that mere deposit of employee's contribution before due date of filing return of income as per Section 139 of Income tax Act, will not make it eligible for deduction.Referring to the decision of Supreme Court in case of Checkmate Services Pvt Ltd. Vs. CIT (2022) 143 taxmann.com 178, the Bench of Prashant Maharishi (Accountant Member) and Narendra Kumar...
The Mumbai ITAT recently clarified that mere deposit of employee's contribution before due date of filing return of income as per Section 139 of Income tax Act, will not make it eligible for deduction.
Referring to the decision of Supreme Court in case of Checkmate Services Pvt Ltd. Vs. CIT (2022) 143 taxmann.com 178, the Bench of Prashant Maharishi (Accountant Member) and Narendra Kumar Choudhry (Judicial Member) reiterated that “such sum collected from employees if not deposited within the due dates prescribed under the respective Provident Fund and ESIC Act, is dis-allowable irrespective of the fact that the same were deposited before the due dates of filing of return of income”. (Para 9)
As per the brief facts of the case, the assessee company, engaged in the business of trading of equipment and accessories, filed its return showing total income of Rs.92,50,710/-. On scrutiny, the AO found that in tax audit report employees' contribution of Rs.7,87,510/- has been paid beyond the due date prescribed under the Provident Fund Act. This is the employees' contribution, which should have been deposited before the due date prescribed under the respective Provident Fund Act. The assessee also deposited Rs.27,124/- being ESIC contribution of the employee beyond the due date prescribed under the ESIC Act. The AO however made the disallowance of Rs.8,14,634/-
The Bench found that assessee has collected employees' contribution under the Provident Fund Act and ESIC Act from its employees.
However, the Bench noted that such contributions were not deposited within due date specified under the respective Provident Fund and ESIC Act but were deposited within the due date prescribed for filing return of income.
Dis-allowance was made by the Assessing Office and confirmed by the CIT (A) by looking at the provisions of Section 2(24)(x) r/w Section 36(1)(va) of the Act, added the Bench.
Hence, the ITAT dismissed the assessee's appeal.
Counsel for Appellant/ Assessee: None
Counsel for Respondent/ Revenue: H.M Bhatt
Case Title: C. Doctor & Co. Pvt Ltd verses ACIT
Case Number: ITA No.5654/Mum/2011
Click here to read/ download the Order
