2025 (3) TMI 1982

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....ws:- 1. Whether the Learned Commissioner of Income Tax (Appeals) is right in confirming the addition of PF contribution of Rs. 1,39,050/- based on the typographical error in the Tax Audit Report filed; while in fact the details of actual payment has been brought to the notice of Central Processing Centre (CPC) mentioning the challan CR No. and date, which is within the due date applicable under Section 43B the Income Tax Act, 1961?. 2. Whether the Learned Commissioner of Income Tax (Appeals) is right in confirming the addition made by CPC in respect of interest of Rs. 10,437/- paid under Section 201(1A), which is not a penalty to be disallowed following the decision of the Hon'ble Supreme Court in the case of MALWA VAN....

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....s paid within due date prescribed under Provident Fund Act, hence, entitled to deduction u/s.36(1)(va) of the Act as per the judgement of the Hon'ble Apex Court in the case of Checkmate Services Pvt. Ltd. vs. CIT reported in (2022) 448 ITR 518 (SC) dated 12.10.2022. The learned AR has placed on record payment challans to the provident fund account from pages 90 to 96 of the paper book. The learned AR submitted that adjustment was made u/s.143(1) of the Act only for the reason audit report by inadvertent mistake had shown the payment date as 08.05.2022 instead of actual date of payment i.e. 08.05.2021. As regards the issue whether interest paid u/s.201(1A) of the Act is an allowable deduction u/s.37 of the Act, learned AR relied on Kolkata B....

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....s paid in the month of April, 2021. This aspect needs verification by the AO. Therefore, the matter is restored to the files of AO. The AO is directed to examine whether the wages paid for the month of April, 2021, the employees contribution for same has been paid into the Provident Fund account within the due date prescribed under P.F Act. If it is found by the AO that amount has been paid within due date prescribed under respective PF & ESI Act, the same shall be allowed as deduction u/s.36(1)(va) of the Act. It is ordered accordingly. Interest u/s.201(1A) of the Act:- 9. The CIT(A) has confirmed adjustment made u/s.143(1) of the Act by observing as under:- "4.2.1 The contention of appellant has been gone through. The refer....

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.... for delayed period, it cannot be claimed as business deduction". It was further held by the Hon'ble Court that "interest paid takes colour from the nature of principal amount required to be paid, but not paid in time and this principal amount being income-tax, interest is in the nature of direct tax and cannot be regarded as compensatory payment and allowed as business expenditure". The relevant finding of the Hon'ble Court reads as under:- "15. The counsel for the assessee in support of his submission that the interest paid by the assessee was merely compensatory in character besides relying on the case of Mahalakshmi Sugar Mills Co. (supra) also relied on the decisions of the Apex Court in the cases of Prakash Cotton Mills (P.) ....