TaxTMI 
TaxTMI 
2017 (11) TMI 512
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....nly if it is paid within the due date as per the respective Act as specified in section 36(1)(va) of the I.T. Act, 1961? 2. Whether Ld. CIT(A) is justified in deleting the disallowance of Rs. 29,95,149/- ignoring the fact that the provisions of section 43B which is applicable in respect of employees contribution is different from the provisions of section 36(l)(va) which is applicable in respect of employee's contribution? 3. Whether Ld. CIT(A) is justified in deleting the disallowance without appreciating the fact that the opening words of section 43B make it clear that the said section would have overriding effect and apply only when a deduction is otherwise allowable under the I.T Act, 1961? 4. Whether Ld. CIT(A) is justified in deleting the disallowance of Rs. 29,95,149/- without considering and commenting upon the facts mentioned in the various cases-laws cited by the AO in his assessment order? 5. Whether Ld. CIT(A) is justified in deleting the disallowance without appreciating the fact that in the present case as per the explanation to section 36(1 )(va) of the Act, the due date of payment is the date by which the concerned assessee was required as an employer to....
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....before the Tribunal raising the grounds as reproduced above. 4. The sole issue raised in the grounds of the appeal is related to addition in respect of ESI payment, deleted by the Ld. CIT-(A). 5. Before us, the Ld. Sr. DR relied on the order of the Assessing Officer and argued that in terms of section 36(1)(va) of the Act, employees' contribution deposited after due date of the relevant Act, is not allowable. 6. On the other hand, Ld. counsel, relied on the order of the learned CIT-(A). 7. We have heard the rival submissions and perused the relevant material on record. We find that the only issue involved in various grounds raised is whether the payment of ESI made after the due date prescribed under the ESI, is allowable as deduction or not. The contention of the learned counsel is that same is allowable in terms of section 43B of the Act, if paid before the due date of filing the return of income. The contention of the Ld. Sr. DR is that deduction of employees' contribution to ESI or provident fund after the due date prescribed under the relevant Act is governed by the provisions of section 36(1)(va) of the Act and not governed by the provisions of section 43B of the Act. 8.....
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....s follows: "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 sub section (1) of section 36." 4.4 After this amendment it became crystal clear that an employer had to make payment of employees' contribution in order to enable a deduction from its income. As regards the due date for making the payment, it was specified that the due date would be the same as given in section 36(l)(va) of the I. T. Act, 1961. This due date was the date by which the assessee was required as an employer to credit the employees' contribution to the employees account in the relevant fund. Thus, as a result of this amendment, it became obligatory for assessees to deposit the employees' contribution by the due date specified in the respective Acts. Subsequent to this amendment, the Assessing Officer started making disallowances in all such cases where the payment of employees" contribution was made beyond the due date as per section 36(1)(va) of the I.T. Act, 1961....
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.... payment of employees' contribution by the due date specified in the respective Acts in order to claim it as a deduction. It was only when the Government found that the provision was too harsh that amendment was brought about by Finance Act 2003" with effect from 1-4-2004. The amendment made it crystal clear that if the employer deposited the contribution of employees' to ESI/EPF by the due date for filing of return of income, there was no room for disallowance on the issue of employees' contribution to ESI/EPF. 4.6 The above discussion makes it abundantly clear that there is no force in the AO's contention that section 43B is not applicable to employees' contribution to ESI/EPF. If the premise that section 43B is not applicable to provident fund breaks down, then it follows that employees' contribution to Provident Fund and ESI paid by the due date for filing the return of income would be eligible for a deduction. Taking the same logic forward, a number of judicial pronouncements on this issue have held that if the employees' contribution to PF and ESI is paid by the due date for filing the return of income, no disallowance is called for on this issu....
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....bove that as soon as employees contribution towards provident fund or ESI is received by the assessee by way of deduction or otherwise from the salary/wages of the employees, it will be treated as 'income' at the hands of the assessee. It clearly follows therefrom that if the assessee does not deposit this contribution with provident fund/ESI authorities, it will be taxed as income at the hands of the assessee. However, on making deposit with the concerned authorities, the assessee becomes entitled to deduction under the provisions of section 36(l)(va) of the Act. Section 43B(b), however, stipulates that such deduction would be permissible only on actual payment. This is the scheme of the Act for making an assessee entitled to get deduction from income insofar as employees' contribution is concerned. It is in this backdrop we have to determine as to at what point of time this payment is to be actually made." 8. Upon perusal of the aforesaid, we are of the considered opinion that the decisions rendered in P.M. Electronics Ltd.'s case (supra) and AIMIL Ltd.'s case (supra) have correctly laid down the law and there is no justification or reason to differ with th....
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....is Essae-Teraoka Private limited Vs. DCIT (2014) 43 Taxmann.com 33 (Karnataka). The relevant extracts of the said order are reproduced hereunder: "Paragraph-38 of the PF Scheme provides for Mode of payment of contributions. As provided in sub-para(l), the employer shall, before paying the member, his wages, deduct his contribution from his wages and deposit the same together with his own contribution and other charges as stipulated therein with the provident fund or the fund under the ESI Act within fifteen days of the closure of every month pay. It is clear that the word "contribution" used in Clause(b) of Section 43B of the IT Act means the contribution of the employer and the employee. That being so, if the contribution is made on or before the due date for furnishing the return of income under sub-section(l) of Section 139 of the IT Act is made, the employer is entitled for deduction. 21. The submission of Mr. Aravind, learned counsel for the revenue that if the employer fails to deduct the employees' contribution on or before the due date, contemplated under the provisions of the PF Act and the PF Scheme, that would have to be treated as income within the meaning of ....
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.... 10. We find that Hon'ble jurisdictional High Court has allowed deduction of payment of employee's contribution before the due date of filing of return of income after considering the decision of the Hon'ble Supreme Court in the case of CIT Vs. Vinay Cement limited (supra). In the instant case, identical issue in dispute is before us. The decision of the jurisdictional High Court is binding on the Tribunal and first appellate authority working within the jurisdiction of the High Court. In our considered opinion, the finding of the learned CIT-(A) on the issue in dispute is well reasoned and no interference on our part is required, accordingly, we uphold the same. The grounds of appeal are accordingly dismissed. 11. In result, the appeal is dismissed. ITA No. 6267/Del/2014 for AY 2011-12 12. The grounds of appeal raised in ITA No.6267/Del/2014 for assessment year 2011-12 are reproduced as under: 1. Whether Ld. CIT(A) is justified in deleting the disallowance of Rs. 42,88,215/- ignoring the fact that employees' contribution to PF and ESI received by the employer is income in his hands as per section 2(24)(x) and it is deductible only if it is paid within the due date as per the....