Appeal granted for ESIC contribution deduction, stressing timely payments. The Tribunal partly allowed the appeal, directing the Assessing Officer to verify and allow the deduction for Employees State Insurance Corporation (ESIC) ...
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Appeal granted for ESIC contribution deduction, stressing timely payments.
The Tribunal partly allowed the appeal, directing the Assessing Officer to verify and allow the deduction for Employees State Insurance Corporation (ESIC) contribution made within the prescribed period. A significant portion of the contribution was found to have been made on time, warranting its allowance as a deduction. However, the remaining amount was rightly disallowed due to late payment. The Tribunal emphasized adherence to the law without estoppel, ultimately resulting in the partial allowance of the appeal.
Issues involved: The judgment involves the disallowance of contribution towards Employees State Insurance (ESIC) under section 36(1)(va) of the Income Tax Act, 1961 and the lack of consideration of submissions by the appellant by the Learned CIT (A).
Disallowed ESIC Contribution: The assessee, a private limited company providing micro loans, filed an appeal against the addition of Rs. 20,47,733 for ESIC contribution disallowance. The Central Processing Centre added this amount due to delayed payment of employees' ESIC contribution. The CIT (A) confirmed this addition. The Tribunal considered the undisputed fact that the payment was made beyond the due date prescribed by law. Relying on a Supreme Court case, it was established that such delayed payments are not allowable deductions. The appellant argued that the payments were made within the prescribed period but were incorrectly reported by the tax auditor. The correct audit report and challan verification supported this claim.
Judicial Decision: After reviewing the evidence, the Tribunal found that a significant portion of the ESIC contribution was made before the due date. Accordingly, the Tribunal partly set aside the CIT (A) order, allowing the deduction of Rs. 19,09,265 deposited by the assessee on time. However, the remaining amount of Rs. 1,96,438 was rightly disallowed due to late PF contribution deposit. The Tribunal emphasized that the deduction for ESIC contribution made on time should be allowed, following the law without estoppel. Therefore, the appeal was partly allowed, with the AO directed to verify and allow the deduction for ESIC contribution made within the prescribed period.
Separate Judgment: The judgment was delivered by Shri Kuldip Singh, Judicial Member, and Shri Prashant Maharishi, Accountant Member.
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