JAGANNATH CORPORATION PROJECTS PRIVATE LIMITED,BHUBANESWAR vs. DCIT CIRCLE-1(1), BHUBANESWAR
What did the Tribunal hold?
The Tribunal, following the Supreme Court's decision in Checkmate Services Pvt Ltd, held that delayed employee contributions to PF and ESI are not allowable under Section 36(1)(va). However, it restored the issue to the AO for re-adjudication, granting liberty to the assessee to raise other arguments.
What were the facts?
The assessee's appeal concerned the delayed payment of employee contributions to PF and ESI for the assessment year 2020-2021. The Revenue argued that this delay made the payments non-allowable.
What were the issues?
Whether delayed payment of employee contributions to PF and ESI is allowable as a deduction, and if not under Section 36(1)(va), whether it can be allowed under other provisions.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL,
Before: ARUN KHODPIA & ARUN KHODPIA & ARUN KHODPIA
This is an appeal filed by the assessee This is an appeal filed by the assessee against the order of the ld against the order of the ld CIT(A), NFAC, Delhi, , NFAC, Delhi, dated 13.9.2022 in Appeal No.ITBA/NFAC/S/250/2022 ITBA/NFAC/S/250/2022- 23/1045437949(1) /1045437949(1) for the assessment year 2020-2021. 2021.
Shri Tarun Kumar Agarwal Shri Tarun Kumar Agarwalla ld AR appeared for the assessee and ld AR appeared for the assessee and Shri S.C.Mohanty, ld Sr DR appeared for the revenue. Shri S.C.Mohanty, ld Sr DR appeared for the revenue.
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At the outset, it was submitted by ld Sr DR that the issue involved in this appeal is delayed payment of PF and ESI in respect of employees contribution. Ld Sr DR submitted that the issue is now squarely covered by the decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt Ltd vs CIT in Civil Appeal No.2833 of 2016 dated 12.10.2022, wherein, the Hon’ble Supreme Court has categorically held that if the employees contribution to PF and ESI has been paid beyond the time prescribed under the relevant PF Act, then same is not allowable under section 43B even after the payment has been made before the due date of filing of return under the Income tax Act. It was the submission that the amount of employees contribution to PF and ESI, which has not been paid within the due date as prescribed under the relevant Act, has been held by Hon’ble Supreme Court to be not allowable u/s.36(1)(va) of the Act. It was the submission that the Hon’ble Supreme Court in paras 52 & 53 has also categorically held that the provisions of section 43B would not apply to the employees’ contribution to PF and ESI.
We have considered the rival submissions. Admittedly, the Hon’ble Supreme Court in the case of Checkmate Services Pvt Ltd(supra) has categorically held that the employees contribution to PF and ESI to the extent it is not paid within due date prescribed under the PF Act, is not allowable u/s.36(1)(va) of the Act. The Hon’ble Supreme Court has also admittedly held that the provisions of section 43B would not apply to the P a g e 2 | 4 provisions of section 36(1)(va) of the Act in respect of employees contribution. Respectfully following the decision of Hon’ble Supreme Court in the case of Checkmate Services Pvt Ltd(supra), we are of the view that the delayed payment in respect of employees contribution to PF and ESI is not allowable.
In the case of Nirakar Security & Consultancy Services Pvt Ltd vs ITO in for Assessment Year 2016-17, order dated 17.10.2022, the Co-ordinate Bench of this Tribunal after considering the arguments of ld AR, has restored the issue to the file of the Assessing officer with the following directions: “6. Liberty is granted to the ld AR to make all submissions in respect of allowability of disallowed contribution of the employees to PF and ESI under other relevant provisions in the interest of justice. This direction is being given because ld AR has submitted that as the amount is not allowable under section 36(1)(va) of the Act and same is also not covered under section 43B of the Act, the amount of delayed contribution to PF and ESI in respect of employees contribution would be treated as income in the hands of the assessee u/.s.2(24)(x) and on subsequent payment of the same, it would be a business expenditure, which can be claimed u/s.37(1) of the Act. We are not expressing any opinion in regard to his arguments as it has not been examined by the lower authorities. Liberty is also granted to the assessee to raise all arguments as are found necessary by him before the lower authorities.”
As the issue in the present appeal is also identical to the issue in the case of Nirakar Security & Consultancy Services Pvt Ltd.,(supra), on identical findings the issue in this appeal is restored to the file of the AO for re-adjudication after granting the assessee adequate opportunity of being heard.
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In the result, appeal of the assessee stands partly allowed for statistical purposes.
Order dictated and pronounced in the open court on 23/02/2023.
Sd/- sd/- (Arun Khodpia) (George Mathan) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 23/02/2023 B.K.Parida, SPS (OS) Copy of the Order forwarded to :
1. 1. The Appellant : Jagannath Corporation Projects pvt Ltd., Plot No.397, Sarangi Bhawan Garage Chhak, Lewis Road, Bhubaneswar.
2. The Respondent: CIT (A), NFAC, Delhi 3. The CIT(A)-, 4. Pr.CIT-, 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// By order
Sr.Pvt.secretary ITAT, Cuttack
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More judgments on Section 36(1)(va)
- Vco Consulatatns and Sevices Private… vs ITO, Corporate Ward 3(3), ChennaiITA 2145/CHNY/2025[2019-20]Status: Disposed16 Oct 2026AY 2019-20
- R K Swamy Limited, Chennai vs DCIT Non Corporate Circle 10(1), ChennaiITA 504/CHNY/2026[2018-19]Status: Disposed14 Oct 2026AY 2018-19
- M/S. R.K. Swamy Ltd., Chennai vs DCIT, Ncc-10(1), ChennaiITA 2822/CHNY/2025[2020-21]Status: Disposed14 Oct 2026AY 2020-21
- Rajesh Maru, Mhow vs ITO-5(1), IndoreITA 839/IND/2025[2023-2024]Status: Disposed12 Oct 2026AY 2023-2024
- Rajesh Maru, Mhow vs ITO-5(1), IndoreITA 838/IND/2025[2022-2023]Status: Disposed12 Oct 2026AY 2022-2023
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