BRAY CONTROLS INDIA PVT. LTD,VADODARA vs. ACIT, CIRCLE-1(1)(1), VADODARA

In the grounds of appeal, sole issue involved is that the ld.CIT(A) has erred in confirming disallowance of Employees Contribution towards PF amounting to Rs.21,75,399/- which was disallowed by the AO under section 36(1)(va) r.w.s. 2(24)(x) of the Income Tax Act, 1961.

3. With the assistance of the ld.representatives, we have gone through the record carefully. It merges out from the record that the assessee has filed its return of income on 24.11.2014 declaring total loss income at Rs.6,24,28,315/-. Notice under section 143(2) was issued and served upon the assessee for scrutiny assessment. On scrutiny of the accounts, it revealed to the AO from the auditors’ of the assessee- company have certified that employees’ contribution to P.F. of Rs18,22,401/- were paid beyond the due date specified under the relevant Act. The ld.AO has reproduced accounts of such contribution made by the employees showing actual payment, due date of payment, actual date of payment. Such details are reproduced in para 5 of the assessment order, which actually came around Rs.21,75,399/-. Since the assessee has made payment after the due date of payment, the ld.AO issued show cause notice as to why the amount of late payment of PF should not be disallowed and added back to the income of the assessee. Since no satisfactory explanation was given by the assessee, the ld.AO following judgment of Hon’ble jurisdictional High Court in the case of Gujarat State Road Transport Corpn vs. CIT, 366 ITR 170 disallowed this amount and added an amount of Rs.21,75,399/- to the total income of the assessee. The first appellate authority confirmed the same with direction to verify whether any of payments made by the assessee towards employees’ contribution of provident fund falls within the grace period or not; and if so, then the same should be allowed. Dissatisfied with the order of the ld.CIT(A), the assessee is now before the Tribunal.

We have perused these details of payment recorded by the AO in the assessment order and details reproduced by the ld.CIT(A) in the impugned order. The AO has specifically held that these were not paid within due date provided in the PF and ESI Acts, therefore, he disallowed it. The ld.CIT(A) has noticed some mismatch in this order and while confirming order of the AO on the basis of judgment of Hon’ble jurisdictional High Court cited (supra), directed the AO to verify date of payment taking into consideration grace period allowable under the Act. If the payment was made within the due date including the grace period, then claim of the assessee should be allowed to that extent, and the balance amount stand disallowed under section 36(1)(va) of the Act. Since order of the ld.CIT(A) was in accordance with judgment of Hon’ble jurisdictional High Court, we do not find any infirmity in order of the ld.CIT(A), the same is accordingly upheld, and grounds of appeal of the assessee are rejected.

In the result, appeal of the assessee is dismissed.