2019 (1) TMI 1927 - AT - Income Tax

Tribunal Upholds CIT(A) Order Allowing Deduction for Employees' Contribution

The tribunal upheld the CIT(A) order based on the decision of a coordinate bench and various judicial precedents supporting the deduction for employees' ... Allowability of employees' provident fund contribution paid before due date of filing return under section 43B and section 36(1)(va) - treatment of employees' contribution as deemed income under section 2(24)(x) - definition and statutory treatment of 'contribution' under the Provident Fund Act - precedential value of coordinate bench decisions and construction favouring the assesseeAllowability of employees' provident fund contribution paid before due date of filing return under section 43B and section 36(1)(va) - definition and statutory treatment of 'contribution' under the Provident Fund Act - Employees' contribution to provident fund remitted after the due date under the Provident Fund Act but before the due date for filing the income-tax return is allowable as a deduction and not exigible as deemed income. - HELD THAT: - The Tribunal held that the Provident Fund Act and its Scheme treat 'contribution' as encompassing both employer and employee shares and prescribe a single due date for depositing contributions, indicating no statutory distinction between the two. Section 43B(b), construed with the proviso allowing payment up to the due date of furnishing the return under section 139(1), permits deduction where the total contribution is deposited on or before that date. The Tribunal followed coordinate-bench and High Court precedents which reached the same conclusion, and applied the principle that, where two reasonable constructions exist, the one favourable to the assessee should be adopted. On these grounds the CIT(A)'s deletion of the addition was upheld and the revenue's appeal dismissed. [Paras 7, 8]The addition disallowing employees' contribution to provident fund was deleted; contributions deposited before the due date of filing the return are allowable and the revenue's appeal is dismissed.Final Conclusion: Appeal dismissed; the Tribunal upheld the CIT(A)'s order deleting the disallowance and held that employees' provident fund contributions paid before the due date for filing the return are allowable under the relevant provisions. Issues Involved:Whether the contribution received from the employees paid before the due date of filing of the return is allowable or not.Analysis:The appeal was against the order of the Commissioner of Income Tax (Appeals) for the Assessment Year 2014-15. The Assessing Officer disallowed the remitted provident fund by the assessee as deemed income under section 2(24)(x) r.w.s. 36(1)(va) of the Act. The CIT(A) directed the Assessing Officer to allow the claim of the assessee based on a decision of a coordinate bench. The only issue was whether the contribution received from employees paid before the due date of filing the return is allowable. The ITAT, Visakhapatnam Bench in a previous case held that there is no distinction between employees' and employer's contribution to PF. Section 43B of the Act allows deductions for payment made before the due date of filing the Income Tax return. Several judicial precedents were cited supporting the deduction for employees' contribution made before the due date of filing the return. The tribunal upheld the CIT(A) order based on these precedents, dismissing the appeal by the Revenue.In conclusion, the tribunal upheld the CIT(A) order based on the decision of a coordinate bench and various judicial precedents supporting the deduction for employees' contribution made before the due date of filing the return. The appeal by the Revenue was dismissed in favor of the assessee.