TaxTMI 
TaxTMI 
2016 (5) TMI 925
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....the Commissioner of Income Tax (Appeals), Panchkula gravelly erred in upholding the addition of Rs. 3,37,424/- made by the ld. Assessing Officer on account of alleged delayed payment of PF." 6. Briefly, the facts are that the Assessing Officer made disallowance of employees' share of EPF deposited by the assessee after the due date as provided under the EPF Act, rejecting the contentions of the assessee that the same is allowable as the deposit is made before the due date of filing the return. Reliance was placed on the judgment of Bombay High Court in the case of CIT v. Pamwi Tissues Ltd. [IT Appeal No. 1034 of 2014, dated 4-2-2008]. 7. Before the learned CIT (Appeals), again the same contention was reiterated. However, the learned CIT (Appeals) did not find himself in agreement with the same. He was of the view that Explanation to section 36(1)(va) of the Income Tax Act, 1961 (in short 'the Act') provides the meaning of 'due date' as being the due date prescribed under the relevant fund. Reliance was placed on the judgment of the Hon'ble Supreme Court in the case of Alom Extrusions Ltd. , 319 ITR 306 (SC) . 8. Aggrieved, the assessee has come up in appe....
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....sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set up under the provisions of the Employees' State Insurance Act, 1948 (34 of 1948), or any other fund for the welfare of such employees;]" 13. At the first instance any amount received by an employer from its employees as their contributions to such funds is treated as income in the hands of that employer. 14. Provision of section 36(1)(va) reads as under: "36(1) The deduction provided for in the following clauses shall be allowed in respect of the matter dealt with therein, in computing the income referred to in section 28- (va) any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employee' s account in the relevant fund or funds on or before the due date." 15. It is now clear that the amount which was treated as income in the hands of an assessee under section 2(24)(x) of the Act, is allowed as deduction if the same is paid in the said fund on or before due date. 16. The meaning of 'due date' referred to in s....
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....date of filing of return under section 139(1) of the Act. 22. From the above flow of provisions, this picture is quite clear. However, there may be a doubt whether the sums as referred to in section 43B(2) of the Act includes employees' contribution to such funds, or whether it refers to employer's contribution alone. For this, we would like to refer to second proviso to section 43B of the Act, which is omitted by the Finance Act, 2003, w.e.f. 1.4.2004. Prior to its omission, the second proviso as substituted by the Finance Act, 1989 w.e.f. 1.4.1989, read as under : "Provided further that no deduction shall, in respect of any sum referred to in clause (b), be allowed unless such sum has actually been paid in cash or by issue of a cheque or draft or by any other mode on or, before the due date as defined in the Explanation below clause (va) of subsection (1) of section 36, and where such payment has been made otherwise than in cash, the sum has been realised within fifteen days from the due date.]]" 23. Here, the reference is the Explanation below section 36(1)(va) of the Act, which clearly refers to employees' contribution to such funds alone. The provision of that s....
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....y the due date prescribed under the relevant Acts and is deposited late, the employer not only pays interest on delayed payment but can incur penalties also, for which specific provisions are made in the Provident Fund Act as well as the ESI Act. Therefore, the Acts permit the employer to make the deposit with some delays, subject to the aforesaid consequences. Insofar as the IT Act is concerned, the assessee can get the benefit if the actual payment is made before the return is filed, as per the principle laid down by the Supreme Court in Vinay Cement (supra)." 27. We may further add that in case there is default on the part of an employer to deposit the employees' contribution to such fund, the fact that the same is deposited after the due date as provided under there respective Statute, there are consequences provided in those respective Statute, however, the allowability of those expenses for the purpose of Income Tax are to be looked under the Income Tax Act only. 28. In view of the above, we do not hesitate to hold that the employees' contribution to the EPF deposited by the assessee before the due date of filing the return, is an allowable expenses. Since, in the p....