Employer's timely PF & ESIC contributions deemed allowable under section 43B

The ITAT held that if the employer's contribution to PF and ESIC is paid before the due date of filing the return u/s 139(1) of the Act, it is allowable under section 43B, following the Supreme Court's ruling. The Tribunal overturned the disallowance of employees' contribution to PF made after the due date but before filing the return, emphasizing timely payments as per the Income Tax Act. The appeal was allowed, and the decision was pronounced on 30th November 2017.

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Issues:
Allowability of deduction for employees' contribution to PF and ESIC paid beyond due date but before filing return u/s 139(1).

Analysis:
1. The appeal was regarding the disallowance of payment of Employees' contribution to PF and ESIC made after the due date but before filing the income tax return u/s 139(1) for A.Y. 2013-14. The AO disallowed the amounts based on different due dates for ESIC and PF payments, citing section 43B and section 2(24)(x) of the Act.

2. The assessee argued that both employees' and employer's contributions should be remitted to the Govt. A/c before the due date for filing the return u/s 139(1) of the Act, relying on various case laws. The CIT (A) upheld the disallowance, citing decisions of High Courts and the Hon'ble Supreme Court, distinguishing the case of Alom Extrusions.

3. The ITAT, Hyderabad analyzed the conflicting decisions and held that if the employer's contribution to PF and ESIC is paid before the due date of filing the return u/s 139(1) of the Act, it is allowable as per section 43B. The Tribunal referred to a similar decision by the Coordinate Bench at Visakhapatnam, which found no distinction between employees' and employer's contributions, allowing the appeal based on this interpretation.

4. The ITAT's decision was based on the Hon'ble Supreme Court's ruling and the interpretation of section 43B, concluding that no disallowance can be made for employees' contribution to PF if the total contribution is deposited before the due date for filing the return u/s 139(1) of the Act. The appeal of the assessee was allowed, overturning the disallowance made by the lower authorities.

5. The ITAT pronounced the order on 30th November 2017, allowing the assessee's appeal and emphasizing the importance of timely payment of contributions to PF and ESIC as per the provisions of the Income Tax Act.

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