2023 (10) TMI 779 - HC - Income Tax

Employers Can Make Provident Fund and ESI Deposits on Next Working Day After National Holiday Without Penalty

SC ruled that deposits towards provident fund and ESI made on the day following a National Holiday are valid and eligible for deduction. Applying Section ... Amount payable towards the provident fund and towards the ESI fell due on a National Holiday - HELD THAT:- We had the occasion to deal with a similar question of law in PEPSICO INDIA HOLDING PVT. LTD. [2023 (10) TMI 666 - DELHI HIGH COURT] held since date fell on a date which was a National Holiday, the deposit could have been made by the respondent/assessee only on the date which followed the National Holiday. Section 10 of the General Clauses Act would help the respondent / assessee to tide over the objections raised on behalf of the appellant/revenue. Decided in favour of assessee. The appeal was admitted on a single question of law: whether the Tribunal 'misdirected itself on facts and in law in failing to notice that Rs. 44,28,453/-, the amount payable towards the provident fund and Rs. 72,131/-, the amount payable towards the ESI, fell due on a National Holiday i.e., 15.08.2018 and therefore the deposit made on the following date i.e., 16.08.2018 was amenable to deduction?' The court relied on its earlier decision in ITA No. 12/2023 (Pr. Commissioner of Income Tax-7 v. Pepsico India Holding Pvt. Ltd.), observing that 'Since the due date fell on a date which was a National Holiday, the deposit could have been made by the respondent/assessee only on the date which followed the National Holiday.' It further held that Section 10 of the General Clauses Act supports allowing the deduction where deposit was made the next working day. The question of law was answered in favour of the appellant/assessee and against the respondent/revenue; the appeal was dismissed in those terms.