Delayed PF contribution deduction denied under Section 36(1)(va) despite timely deposit; TDS interest under Section 201(1A) not allowable expenditure

ITAT Kolkata dismissed the assessee's appeal on two grounds. First, regarding delayed PF contribution deduction under Section 36(1)(va), the tribunal followed SC precedent in Checkmate Services Pvt. Ltd., holding that deduction cannot be claimed for delayed deposit of employees' PF contribution even when deposited within return filing due date, read with Section 43B. Second, concerning interest paid under Section 201(1A) for delayed TDS payment, the tribunal relied on Premier Irrigation Adritec case, ruling that such interest is not allowable expenditure under Section 37(1) despite being non-penal in nature.

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Issues Involved:
1. Disallowance of employees' contribution towards PF.
2. Disallowance of interest paid on TDS u/s 201(1A).
3. Processing of intimation u/s 143(1) and subsequent order u/s 143(3).

Summary:

1. Disallowance of Employees' Contribution towards PF:
The assessee challenged the disallowance of employees' contribution towards PF amounting to Rs. 92,12,637/- for AY 2017-18 and Rs. 52,00,111/- for AY 2018-19. The Ld. CIT(A) upheld the disallowance, noting that the payment was made after the due date but before the filing of the return u/s 139(1). The Tribunal referred to the Supreme Court's decision in Checkmate Services Pvt. Ltd. v. CIT, which held that deduction u/s 36(1)(va) for delayed deposit of employees' contribution to PF cannot be claimed even if deposited within the due date of filing the return when read with Section 43B. The Tribunal dismissed the grounds of appeal, affirming the CIT(A)'s decision.

2. Disallowance of Interest Paid on TDS u/s 201(1A):
The assessee contested the disallowance of interest paid on TDS amounting to Rs. 1,80,495/- for AY 2017-18 and Rs. 2,25,037/- for AY 2018-19. The Ld. CIT(A) relied on the decisions of the Calcutta High Court in Martin & Harris Private Limited v. CIT and the Madras High Court in CIT v. Chennai Properties & Investment Ltd., which held that interest on late payment of TDS is not an allowable expenditure. The Tribunal upheld this view, stating that such interest is not a business expenditure deductible u/s 37 of the Act. The Tribunal dismissed the grounds of appeal related to this issue.

3. Processing of Intimation u/s 143(1) and Subsequent Order u/s 143(3):
For AY 2018-19, the assessee argued that the intimation u/s 143(1) was rendered infructuous by the subsequent order u/s 143(3), which reduced the loss from Rs. 2,12,14,096/- to Rs. 1,47,30,461/-. The Tribunal observed that the intimation u/s 143(1) is subsumed by the subsequent order u/s 143(3) and dismissed this ground as infructuous.

Conclusion:
The Tribunal dismissed both appeals filed by the assessee for AY 2017-18 and AY 2018-19, upholding the CIT(A)'s decisions on all contested grounds. The judgments were pronounced in the open court on 29th April, 2024.

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