2022 (2) TMI 1206 - AT - Income Tax

Deductions allowed for timely payments despite PF Act's specified time.

Asst. Commissioner of Income Tax Circle-1 (1) Visakhapatnam Versus Bharat Heavy Plates & Vessels Limited

The ITAT upheld the CIT(A)'s decision, ruling that deductions should be allowed for payments made before the due date of filing the return of income, even ... Belated remittance of employees contribution to PF - Deduction made before the due date of filing of the return of income u/s 139(1) - HELD THAT:- Employees contribution to PF and ESI is allowable deduction if the same is paid before the due date of filing the return of income. In the case of APEPDCL [2016 (9) TMI 1040 - ITAT VISAKHAPATNAM] after considering the decision of Hon’ble Karnataka High Court in the case of Essae Teraoka (P) Ltd. [2014 (3) TMI 386 - KARNATAKA HIGH COURT] and the decision of coordinate bench of ITAT Hyderabad in the case of Tetra Soft (India) Pvt. Ltd. [2015 (10) TMI 1601 - ITAT HYDERABAD] and also taking support from the decision of Hon’ble Supreme Court in the case of CIT Vs. M/s Vegetables Products Ltd.[1973 (1) TMI 1 - SUPREME COURT] decided the issue in favour of the assessee. Issues:1. Deletion of addition made by AO on account of belated remittance of employees' contribution to PF.Analysis:The appeal was filed by the revenue against the order of Commissioner of Income Tax (Appeals) for the Assessment Year 2006-07, specifically challenging the deletion of the addition made by the Assessing Officer (AO) on account of belated remittance of employees' contribution to PF amounting to Rs. 2,07,51,824. The AO disallowed this amount as it was paid after the due date, invoking provisions of section 36(1)(va) and section 43B of the Income Tax Act, 1961. The assessee contended that the deduction should be allowed if the payment is made before the due date of filing the return of income under section 139(1) of the Act.The assessee relied on various case laws to support its argument, emphasizing that the impugned payments were made before the due date of filing the return of income. The Commissioner of Income Tax (Appeals) considered these submissions and referred to decisions of different High Courts and ITATs, concluding that PF contribution paid after the due date under the respective Act but before filing the return of income cannot be disallowed under section 43B or section 36(1)(v)(A) of the Act. The CIT(A) directed the AO to delete the addition, allowing the deduction of employees' contribution of PF made before the due date of filing the return of income under section 139(1).The revenue then preferred an appeal before the ITAT, arguing that the addition made by the AO should not have been deleted. The Departmental Representative (DR) contended that the disallowance was justified as the payments were not made within the specified time mentioned in the Employees Provident Fund Act. However, the assessee's counsel reiterated that the payment was made before the due date of filing the return of income under section 139(1) of the Act.After hearing both parties, the ITAT considered the facts and circumstances of the case. It noted that the payments were made beyond the due date specified in the Employees Provident Fund Act but before the due date of filing the return of income. The ITAT referred to various decisions, including those of the Hon'ble Karnataka High Court and ITATs, which supported the view that deductions should be allowed for payments made before the due date of filing the return. The ITAT upheld the CIT(A)'s decision based on these precedents, dismissing the revenue's appeal.In conclusion, the ITAT upheld the CIT(A)'s order, emphasizing that the payments made before the due date of filing the return of income, even if after the specified time under the PF Act, should be allowed as deductions. The appeal of the revenue was dismissed, affirming the deletion of the addition made by the AO regarding the belated remittance of employees' contribution to PF.