Employer's Delayed Provident Fund Contribution Disallowed, Tribunal Upholds Ruling

The Tribunal upheld the CIT(A)'s decision to disallow the delayed deposit of employees' contributions to Provident Fund and Employee State Insurance, citing the Supreme Court's ruling that deductions under section 36(1)(va) are permissible only if contributions are made before the due date. The Tribunal dismissed the assessee's appeal, emphasizing compliance with statutory timelines for contributions.

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Issues: Disallowance of employees' contribution to Provident Fund/Employee State Insurance Funds.

Analysis:
The appeal pertains to the disallowance of delayed deposit of employees' contribution to Provident Fund (PF) and Employee State Insurance (ESI) by the Assessing Officer (AO). The assessee, a company engaged in infrastructure development, filed its return for A.Y. 2016-17, declaring total income of Rs. 94,99,600/-. Subsequently, the assessment was framed under section 143(3) determining the total income at Rs. 1,05,57,730/-. The AO disallowed Rs. 4,70,491/- under section 36(1)(va) r.w.s 2(24)(x) due to delays in depositing employees' contributions to PF & ESI. The assessee appealed to the Ld. CIT(A), who upheld the AO's decision. The assessee then approached the Tribunal challenging the CIT(A)'s order.

During the Tribunal hearing, the assessee's counsel sought an adjournment, which was rejected considering the issue's coverage by a decision of the Hon'ble Apex Court. The Tribunal proceeded to hear the case. The Tribunal noted that the Hon'ble Supreme Court in the case of Checkmate Services Pvt. Ltd. clarified that the deduction under section 36(1)(va) can only be allowed if the employees' share in the relevant funds is deposited by the employer before the due date stipulated in the Acts. As the employees' contributions were deposited after the due date in the present case, the Tribunal found the decision of the Hon'ble Apex Court applicable. Consequently, the Tribunal upheld the CIT(A)'s order, dismissing the assessee's appeal.

In conclusion, the Tribunal dismissed the appeal of the assessee, emphasizing that the deduction under section 36(1)(va) for employees' contributions to PF & ESI can only be allowed if deposited before the due date stipulated in the Acts. The Tribunal's decision was based on the interpretation of relevant legal provisions and the precedent set by the Hon'ble Supreme Court, as highlighted in the case of Checkmate Services Pvt. Ltd.

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