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Income Tax Appellate Tribunal, MUMBAI BENCHES “SMC”, MUMBAI
Before: SHRI OM PRAKASH KANT & MS. KAVITHA RAJAGOPAL
O R D E R Per Kavitha Rajagopal, J.M. This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeal) (‘ld. CIT(A)’ for short) passed u/s. 250 of the Income Tax Act, 1961 (‘the Act’ for short) relevant to Assessment Year (A.Y. for short)
2018-19.
The assessee has challenged the disallowance of ₹22,62,260/- being the delayed 2. deposit of employees contribution towards PF and ESIC.
(A.Y. 2017-18) Sangeeta Udayraj Singh vs. Asst. Director of Income Tax, CPC 3. The brief facts of the case are that the assessee had filed its return of income declaring total income at ₹13,02,910/- and the same was processed u/s. 143(1) of the Act and the Assessing Officer (‘A.O.’ for short)/Centralized Processing Center (‘CPC’ for short) vide an intimation dated 18.03.2019 made a disallowance of ₹22,62,260/- u/s. 36(1)(va) of the Act as employees contribution towards PF & ESIC which was deposited belatedly after the due date prescribed under the relevant Acts but before filing of the return of income.
The assessee was in appeal before the ld. CIT(A) challenging the impugned disallowance who upheld the disallowance made by the A.O./CPC.
The assessee is in appeal before us, challenging the order of the ld. CIT(A).
We have heard the rival submissions and perused the materials available on record. It is observed that the Tribunal vide order dated 26.05.2022 had set aside the order of the ld. CIT(A) and had deleted the disallowance made thereby by relying on the various decisions of the Tribunal in the case of M/s. Kalpesh Synthetics Pvt. Ltd. vs. DCIT, CPC (in A.Y. 2018-19 vide order dated 27.04.2022).
The said matter was recalled by the Tribunal in Miscellaneous Petition filed by the Revenue subsequent to the decision of the Hon’ble Apex Court in the case of Checkmate Services P Ltd. vs. CIT (in Civil Appeal No. 2833 of 2016 vide order dated 12.10.2022).
(A.Y. 2017-18) Sangeeta Udayraj Singh vs. Asst. Director of Income Tax, CPC 7. The ld. Authorised Representative (‘ld. AR’ for short) for the assessee relied on the decision of the Tribunal in the case of Master Polishers (in where the Tribunal had remanded the matter to the file of the A.O. for deciding the term ‘month’ specified in clause 38 of Employees Provident Fund Scheme, 1952 which fixes the time limit for making the payment in respect of contribution to PF to be 15 days from the close of the month concerned. The ld. AR for the assessee stated that the 15 days time limit would commence from the month when the salary was disbursed and not to the wage month.
The ld. Departmental Representative (ld. DR for the short), on the other hand, controverted the said fact and stated that the decisions relied upon by the assessee was only when the Tribunal had set aside the issue to the file of the A.O. to verify when the 15 days time limit would commence from and also contended that the Tribunal in subsequent decisions have clarified the said ambiguity in the case of Creative Textile Mills Ltd. (in vide order dated 25.05.2023). The ld. DR also stated that this issue is no longer res integra as the Hon’ble Apex Court in the case of Checkmate Services Pvt. Ltd (supra) has held that employees contribution which is paid belatedly is no more an allowable deduction.
From the submissions made by the rival parties, it is observed that the Hon’ble Apex Court in the case of Checkmate Services Pvt. Ltd (supra) has allowed the proposition that the employees contribution if deposited after the due date under the relevant Acts nevertheless before filing of the return of income, is not an allowable
(A.Y. 2017-18) Sangeeta Udayraj Singh vs. Asst. Director of Income Tax, CPC deduction. As the Hon’ble Apex Court has taken a view on the said issue, we are inclined to hold that the employee’s contribution towards PF & ESIC paid after the due date prescribed under the relevant Acts even when paid before filing of the return of income is not an allowable deduction. We find no merit in the submission of the assessee and hereby dismiss the ground raised in this appeal.
In the result, the appeal filed by the assessee is dismissed. Order pronounced in the open court on this day of 31st July, 2023.