TaxTMI 
TaxTMI 
2021 (10) TMI 1043
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....Brief facts of the case are as under:- 2. The Assessee being a Co-operative society engaged in manufacturing and sale of sugar, filed its return of income on dated 31/10/2019 for which assessment u/sec. 143(1) of the Act was completed on dated 16/09/2020 by assessing loss of Rs. 10,34,34,964/-. The assessing officer made the addition of Rs. 1,19,93,542/- as delayed payment qua employees share of ESI and PF 3. The Assessee challenged the said addition before the ld. Commissioner (NFAC), who vide order dated 02/03/2021 dismissed the appeal of the Assessee, by concluding as under:- "I have gone through the submission and grounds of appeal of the appellant. In this case the Assessee is in appeal about the addition of Rs. 1,19,93,542/- as delayed payment of employees share of ESI and PF. The Assessee has argued that if paid within the due date of filing of return, same had to be allowed by the CPC. Now there are certain judgments which are in favour of the Revenue. 1. Hon'ble Madras High Court in 100 taxman 244 Madras has held that the belated payment of employees contribution not allowable as deduction u/sec. 43B. 2. Hon'ble Gujarat High Court i....
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.... several judgments of different Hon'ble High Courts both in favour and against the Assessee the view favourable to the Assessee is to be followed. 6. For these and other reasons that are to be urged at the time of hearing of the case the appellant prays that the impugned disputed addition is to be deleted in the interest of justice." 5. Having heard the parties at length and perused the material available on record. The issue involved in the instant appeal relates to the deposit of employees contribution qua ESI & PF after the prescribed dates as per the relevant Acts i.e. ESI & PF, but before filing of return u/sec. 139(1) of the Act. The Ld. Commissioner (NFAC) while relying upon the three judgments of various High Courts, such as, Hon'ble Madras High Court [100 taxman 244 (Madras)], Hon'ble Gujarat High Court [115 taxman 340 (Gujarat)] and Hon'ble Kerala High Court [96 taxman 13 (Kerala)] which are in favour of the Revenue Department and CBDT Circular No. 22/2015, dated 17/12/2015 dismissed the appeal of the Assessee by affirming the disallowance u/sec. 43B of the Act. 5.1 The contention of the Assessee is that PF and ESI contribution of Employees,....
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.... from employees towards provident fund contribution is deemed to be income of the assessee, if the employer not paid the same to the provident fund account of the employee within due date specified under the provisions of PF Act. It is the contention of the assessee that second proviso to section 43B of the Act provides that no deduction shall be allowed unless such sum is actually been paid on or before due date as specified in explanation to 36(1)(va) of the Act which was omitted by the Finance Act, 2003 w.e.f. 1.4.2004 and accordingly, there was no special provision regarding employees' contribution to PF. It is further contended that as per the amended provisions of section 43B of the Act, any sum payable by the assessee as an employer by way of contribution to PF shall be allowed, if the same is paid on or before the due date of filing of return of income u/s 139(1) of the Act. 6. The only issue to be resolved is whether the assessee would be entitled to claim deduction for the employees' contribution made to PF after the due date prescribed under the PF Act, but before the due date prescribed for filing of income tax return in the light of the provisions contained in....
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.... welfare of the employees. The proviso to section provides that any sum paid by the assessee on or before the due date of furnishing return of income u/s 139(1) of the Act, then no disallowance can be made under the provisions of section 43B of the Act. A careful consideration of section 43B of the Act, it is clear that an extension is granted to the assessee to make the payment of PF contributions or any other fund till the due date of furnishing return of income u/s 139(1) of the Act. Therefore, in our opinion, there is no difference between employees and employer contribution to PF and if such contribution is made on or before the due date of furnishing return of income u/s 139(1) of the Act, then deduction is to be allowed under the provisions of section 43B of the Act. 8. The Hon'ble Karnataka High Court, in the case of Essae Teraoka (P) Ltd. Vs. DCIT 366 ITR 408 took the view that the word contribution occurring in section 43B of the Act would include employees' contribution to PF in the light of the definition of the word contribution as per the provisions of section 2(c) of the PF Act. As per the said section, contribution would mean both employer's contribution an....
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.... of Hon'ble Supreme Court, in the case of CIT Vs. M/s. Vegetables Products Ltd. reported in 88 ITR 192, wherein the Hon'ble Supreme Court held that if two reasonable constructions of a taxing provision are possible that construction which favours the assessee must be adopted, therefore, by respectfully following the decision of Supreme Court, when divergent views are expressed by different judicial forums, we prefer to follow the views expressed by the Courts which are in favour of the assessee. 10. Considering the facts and circumstances of this case and also following the judicial precedents as discussed above, we are of the view that there is no distinction between employees' and employer contribution to PF, and if the total contribution is deposited on or before the due date of furnishing return of income u/s 139(1) of the Act, then no disallowance can be made towards employees' contribution to provident fund. The CIT(A) after considering the relevant details rightly deleted the additions made by the A.O. We do not see any reasons to interfere with the order of the CIT(A). Hence, we inclined to uphold the CIT(A) order and dismiss the appeal filed by the revenue." 5.....