2023 (10) TMI 1267 - AT - Income Tax

Tribunal Confirms Addition of Rs. 31,38,091 Under Section 36(1)(va) for Late Payment of Employee Contributions to PF/ESI

The Appellate Tribunal upheld the decision of the Ld. CIT(A), confirming the addition of Rs. 31,38,091/- under section 36(1)(va) of the Income Tax Act for ... Delayed employees’ contribution to ESIC / PF - addition u/s 36(1)(va) on account of late contribution - HELD THAT:- Matter is already decided by Supreme Court in the case of Checkmate Services P. Ltd. v/s. Commissioner of Income Tax-1 [2022 (10) TMI 617 - SUPREME COURT] against Assessee. Also in the case of Pr. CIT v. Suzlon Energy Ltd. [2020 (2) TMI 792 - GUJARAT HIGH COURT] held that where assessee had not deposited employees' contributions towards PF and ESI within prescribed period in law and Assessing Officer by invoking provisions of section 36(1)(va) read with section 2(24)(x) made addition of aforesaid amount to income of assessee, impugned addition made to income of assessee was justified. Decided against assessee. Issues Involved:The judgment deals with the issue of disallowance of delayed payment of employees' contribution to ESIC/PF under section 36(1)(va) of the Income Tax Act.Details of the Judgment:*Issue 1: Disallowance of Employees' Contribution*The assessee appealed against the addition made by the Assessing Officer under section 36(1)(va) for late contribution to PF/ESI. The appellant argued that the payment should be allowed u/s 36 of the Act. However, the Supreme Court clarified that for assessment years prior to AY 2021-22, the non obstante clause under section 43B could not apply to amounts held in trust, such as employee's contributions. The Court differentiated between employer's contribution and amounts held in trust by the employer, emphasizing that the obligation to deposit employee's contribution before the due date remains. Citing relevant case laws, the Tribunal upheld the addition based on the decisions of the Supreme Court and the Jurisdictional High Court, thereby dismissing the appeal.*Conclusion*The Appellate Tribunal upheld the order of the Ld. CIT(A) confirming the addition of Rs. 31,38,091/- under section 36(1)(va) of the Act for late payment of employees' contribution to PF/ESI. The Tribunal relied on the Supreme Court's interpretation of the non obstante clause under section 43B and relevant High Court decisions, dismissing the appeal of the assessee.