ITAT Kolkata allows appeal for EPF late deposit, directs computation under Rule 8(1) (1)

The ITAT KOLKATA allowed the appeal for statistical purposes, directing the Assessing Officer to compute the income after the disallowance of EPF late deposit and apply Rule 8(1) of the Income Tax Rules, 1962 for determining taxable income.

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Issues:
The appeal before ITAT KOLKATA against the order of Commissioner of Income Tax(Appeals) for A.Y. 2019-20.

Issue 1: Additional Ground of Appeal
The assessee filed an additional ground of appeal regarding the disallowance of Rs.2,51,10,171/- on account of late deposit of employees' share towards Provident Fund contribution.

- The assessee contended that income needs to be computed pursuant to Rule 8(1) of the Income Tax Rules, 1962, and only 40% of the total income determined should be taxed.
- The facts revealed that the Assessing Officer disallowed the sum on account of late payment of employees' contribution to Provident Fund, deposited beyond the due date as per the relevant Act.
- The CIT(Appeals) upheld the disallowance, stating that the contribution should be deposited within the time stipulated under the Act, not under section 139(1) of the Income Tax Act.
- The assessee challenged this decision before the Tribunal, citing a recent Supreme Court judgment against them.
- The Tribunal admitted the additional ground, following precedents, and directed the Assessing Officer to compute the income after the disallowance and tax only 40% of the resultant income as per Rule 8(1) of the Income Tax Rules, 1962.

Conclusion:
The ITAT KOLKATA allowed the appeal for statistical purposes, directing the Assessing Officer to compute the income after the disallowance of EPF late deposit and apply Rule 8(1) of the Income Tax Rules, 1962 for determining taxable income.

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