2026 (1) TMI 1105 - AT - Income Tax

Delayed employees' contribution to PF and ESI denied deduction when paid after statutory due date, adjustments in intimation upheld.

Employees' contributions to provident fund and employees' state insurance paid after the statutory due dates are not allowable as business expenditure ... Delayed payment of employees’ contribution to PF and ESI - addition u/s 36(1)(va) - adjustment in intimation u/s 143(1) - HELD THAT:- Hon’ble Telangana High Court in Synergies Castings Ltd. [2025 (1) TMI 816 - TELANGANA HIGH COURT] under the similar circumstances has categorically held that employees’ contribution to PF and ESI deposited after the due dates specified under the respective Acts is not allowable, even if such contribution is made before the due date under section 139(1) of the Act. Accordingly, following the binding decision of the Hon’ble Jurisdictional High Court, we hold that the employees’ contribution deposited by the assessee beyond the statutory due date is not allowable under section 36(1)(va) of the Act. No infirmity in the order of the Ld. First Appellate Authority as well as the adjustments made by CPC under section 143(1) of the Act. Decided against assessee. Issues: Whether employees' contribution to PF and ESI deposited by the employer after the statutory due dates is allowable as a deduction under Section 36(1)(va) of the Income-tax Act, 1961 when the intimation under Section 143(1) predates the Supreme Court decision in Checkmate Services.Analysis: The Tribunal examined whether the deposit of employees' contribution beyond the statutory due dates qualifies for deduction under Section 36(1)(va) in light of the Supreme Court's ruling in Checkmate Services and the binding decision of the jurisdictional High Court addressing identical facts where the intimation under Section 143(1) was issued prior to the Supreme Court decision. The factual finding that the contributions were not deposited on or before the statutory due dates was accepted as not being perverse. The Tribunal further considered that a prior contrary Tribunal decision did not override the binding authority of the jurisdictional High Court.Conclusion: The employees' contribution to PF and ESI deposited after the statutory due dates is not allowable as a deduction under Section 36(1)(va) of the Income-tax Act, 1961. The appeal is dismissed.Ratio Decidendi: Payments constituting employees' contribution to PF and ESI must be deposited on or before the statutory due dates to be allowable under Section 36(1)(va); a Tribunal decision contrary to a binding jurisdictional High Court ruling cannot prevail where the factual finding of delayed deposit is not shown to be perverse.