TaxTMI 
TaxTMI 
Impact of belated deposit of employees’ contribution towards the EPF and ESI under Income Tax
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....rance (Central) Regulations, 1950 (hereinafter, "ESI Regulations") or any other provident or superannuation fund. Origin of the issue: Berger Paints India Ltd. v Commissioner of Income Tax, Kolkata-IV & Anr [2012 (10) TMI 239 - CALCUTTA HIGH COURT] was the lead matter while hearing this batch of appeals. However, the parties agreed to treat Checkmate Services Pvt. Ltd. v Commissioner of Income Tax-I [2014 (11) TMI 641 - GUJARAT HIGH COURT] as the lead appeal, for convenience. Appellants' Contentions: If the scheme of the IT Act were to be kept in mind, the restrictive condition in Section 36(1)(va) i.e., the stipulation that the employees' contribution must be paid within the time specified, failing which no deduction was permissible, w....
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....ee to the employees' account in the relevant fund or funds on or before the due date, the assessee was entitled to the deduction. It was submitted that even the Explanation to Section 36(1) (va) made it clear that for the purpose of that provision, "due date" meant the date by which the assessee, as an employer, had to credit the employees' contribution to the employees' account in the relevant fund under any law or rule or regulation issued thereunder or under any standing order, etc. Therefore, during the relevant assessment year, if the employer did not deposit the entire amount towards employees' contribution with the PF authorities on or before the due date under the EPF/ESI Act, to the extent there was shortfall in deposit of ....
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....o Section 36(1)(va). Parliament therefore, through this amendment, sought to provide for identity in treatment of the two kinds of payments: those made as contributions, by the employers, and those amounts credited by the employers, into the provident fund account of employees, received from the latter, as their contribution. Both these contributions had to necessarily be made on or before the due date. There is no doubt that in Commissioner of Income Tax Versus M/s. Alom Extrusions Limited - 2009 (11) TMI 27 - Supreme Court this court did consider the impact of deletion of second proviso to Section 43B, which mandated that unless the amount of employers' contribution was deposited with the authorities, the deduction otherwise permissible ....
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....on 2(24)(x) too, deems amount received from the employees (whether the amount is received from the employee or by way of deduction authorized by the statute) as income - it is the character of the amount that is important, i.e., not income earned. Thus, amounts retained by the employer from out of the employee's income by way of deduction etc. were treated as income in the hands of the employer. The significance of this provision is that on the one hand it brought into the fold of "income" amounts that were receipts or deductions from employees income; at the time, payment within the prescribed time - by way of contribution of the employees' share to their credit with the relevant fund is to be treated as deduction (Section 36(1)(va)). The....