2019 (1) TMI 1547 - AT - Income Tax

ITAT rules no disallowance for delayed PF contribution if total deposited before income return due date.

The Asst. Commissioner of Income Tax Circle-5 (1) Visakhapatnam Versus M/s Brandix India Apparel City Private Ltd. AND Vice-Versa

The ITAT upheld the CIT(A)'s decision to delete the addition made by the AO for delay in remitting employees' PF contribution. The Tribunal ruled that as ... Addition u/s 43B - delay in remitting the employees contribution to Provident Fund (PF) accounts - assessee remitted the employees contribution beyond the due date specified u/s 36(1)(v) - HELD THAT:-As decided in M/S. EASTERN POWER DISTRIBUTION COMPANY OF A.P. LTD. AND VICA-VERSA [2016 (9) TMI 1040 - ITAT VISAKHAPATNAM] the employees contribution to PF required to be allowed even if the same is paid before the due date of filing the return u/s 139(1) of the Act. The Tribunal has followed the decision of ESSAE TERAOKA PVT LTD VERSUS DEPUTY COMMISSIONER OF INCOME-TAX [2014 (3) TMI 386 - KARNATAKA HIGH COURT] and TETRA SOFT (INDIA) PVT. LTD. [2015 (10) TMI 1601 - ITAT HYDERABAD] while delivering the above ruling. Therefore, we decided issue in favour of assessee. Issues:Appeal against order of CIT(A) regarding addition for delay in remitting employees' PF contribution.Analysis:The appeal involved the addition made by the Assessing Officer (AO) for the delay in remitting the employees' contribution to Provident Fund (PF) accounts. The assessee remitted the PF contribution beyond the due date specified under the Income Tax Act, 1961. The AO disallowed Rs. 14,06,305 representing the employees' contribution to EPF to the returned income. The CIT(A) deleted this addition based on the decision of the ITAT in a similar case. The ITAT held that if the total contribution is deposited before the due date of filing the return of income, no disallowance can be made towards employees' contribution to provident fund. This decision was supported by the rulings of the Karnataka High Court and ITAT, Hyderabad in other cases. The ITAT upheld the CIT(A) order and dismissed the appeal of the revenue.The Tribunal consistently held that employees' contribution to PF should be allowed even if paid before the due date of filing the return. This view was based on the decisions of the Karnataka High Court and ITAT, Hyderabad in relevant cases. As a result, the order of the CIT(A) was upheld, and the appeal of the revenue was dismissed. The assessee had filed cross objections in support of the CIT(A)'s order, but since the revenue's appeal was dismissed, the cross objections became infructuous and were also dismissed. In conclusion, both the appeal of the revenue and the cross objections of the assessee were dismissed by the Tribunal.