CHECKMATE SERVICES PRIVATE LIMITED,VADODARA vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1(1)(1), VADODARA, VADODARA

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ITA 852/AHD/2026Status: DisposedITAT Ahmedabad15 June 2026AY 2020-215 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that employees' PF and ESIC contributions are deductible only if deposited within the statutory due dates prescribed by the respective Acts, not merely by the due date of filing the return. This decision was based on the binding precedents of the Gujarat High Court and the Supreme Court.

What were the facts?

The assessee, engaged in providing security personnel, delayed the deposit of employees' PF and ESIC contributions beyond the statutory due dates. The Income Tax Department made an addition for this delayed deposit, which was confirmed by the CIT(A).

What were the issues?

Whether delayed deposit of employees' PF and ESIC contributions beyond statutory due dates are allowable as a deduction. The interpretation of 'due date' under Section 36(1)(va) in relation to the timing of salary disbursement and deposit.

Which sections of the Income-tax Act were involved?

Section 36(1)(va),Section 143(1)(a),Section 139(1),Section 43B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD

Before: DR. B.R.R. KUMAR, VICE-SHRI RAHUL CHAUDHARY

For Appellant: Ms Kaushani Shah, AR
For Respondent: Shri Ram Tiwari, CIT. DR
Hearing: 09.06.2026Pronounced: 15.06.2026

PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- Delay Condoned The captioned two appeals have been filed by the Assessee against the separate orders passed by the National Faceless Appeal Centre (NFAC), Delhi/ Learned Commissioner of Income Tax (Appeals) vide orders dated 19.12.2023 & 05.03.2024 for the Assessment Years 2020-21 and 2021-22. Since the issues involved in both the appeals are common and identical, we extract the grounds of appeal raised in ITA No.852/Ahd/2026 for Assessment Year 2020-21 for the purpose of adjudication. The decision rendered in the said appeal shall apply mutatis mutandis to the other appeal bearing ITA No. 853/Ahd/2026 for Assessment Year 2021-22.

ITA Nos. 852-853/Ahd/2026 Asst. Years: 2020-21 & 2021-22 - 2–

ITA No.852/Ahd/2026 for AY 2020-21

2.

The assessee has raised the following grounds of appeal:

1.

On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming addition of Rs. 30,03,01,778/- account on of debatable and contentious issue as prima-facie adjustment u/s 143(1)(a) of the Act. 2. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming addition of Rs. 30,03,01,778/- on account of delay in payment of employees' PF and ESIC contribution even when at the relevant time different High Courts have given contradictory judgments. 3. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in interpreting section 36(1) (va) by linking "due date" to the statutory liability under the PF/ESIC Acts without appreciating that such liability arises only upon actual disbursement of salary, and therefore deposits made within the statutory timeline. computed from the month of salary payment ought to have been allowed. 4. On the facts and circumstances of the case as well as law on the subject, the has erred in learned CIT(A) confirming the disallowance of Rs. 30,03,01,778/- without considering that since the salary was disbursed in a subsequent month, the employees' contribution such arose upon disbursement, and as per Section 36(1) (va) read with para 38 of the EPF Scheme, 1952, the due date is 15 days from the end of the month of actual payment, thereby making the deposit within that period timely. 5. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the disallowance of Rs. 30,03,01,778/- without considering that the delay in depositing such sum under the relevant Welfare Fund Act was due to a bonafide procedural delay. 6. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in upholding the disallowance of employees' PF and ESIC amounting to Rs. 30,03,01,778/- u/s contribution to 36(1)(va), despite the appellant the said having deposited contributions before the filing of return under section 139(1), thereby ignoring the legislative intent of section 43B.

ITA Nos. 852-853/Ahd/2026 Asst. Years: 2020-21 & 2021-22 - 3– 7. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in not applying section 43B to employees' contribution towards PF and ESIC, even though various High Courts have consistently held in a liberal if interpretation that such contributions are deposited before the due date of filing return under section 139(1), the deduction must be allowed. 8. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming addition of Rs. 30,03,01,778/-on account of delay in payment of employees' PF and ESIC contribution without considering that making prima-facie adjustments u/s 143(1) of the Act on debatable issues is mistake apparent on record and hence, rectifiable u/s.154 of the Act.

3.

Brief facts of the case are that the assessee is engaged in the service industry of providing security personnel. The assessee filed its return of income for AY 2020-21 on 04.01.2021 declaring total income of Rs.78,36,040/-. The return was processed under section 143(1)(a) of the Act and an intimation was issued making an addition of Rs.53,48,38,653/- on account of delayed deposit of employees' contribution towards PF/ESIC. Subsequently, it was noticed that there was a double entry in Clause 20(b) of the Tax Audit Report relating to details of contributions received from employees for various funds referred to in section 36(1)(va) of the Act. Accordingly, the auditor revised the Tax Audit Report. Thereafter, an order under section 154 of the Act was passed restricting the addition to Rs.30,03,01,778/-.

4.

Heard the argument of both the parties and perused the material available on record.

5.

The Assessing Officer made a disallowance under Section 36(1)(va) r.w.s. 2(24)(x) of the Act for delay in deposit of employees’ contribution to PF/ESI beyond the due date as prescribed under the statute. We find that the issue stands squarely covered against the assessee by the judgment of

ITA Nos. 852-853/Ahd/2026 Asst. Years: 2020-21 & 2021-22 - 4– Hon’ble Gujarat High Court in the case of CIT Vs. Gujarat State Road Transport Corporation in Tax Appeal No. 637 of 2013 and the judgement of the Hon’ble Apex Court in assessee’s own case, i.e. Checkmate Services (P.) Ltd. v. CIT [2022] 143 taxmann.com 178, wherein it was held that employees’ contribution to PF/ESI is allowable as deduction only if deposited within the due dates as prescribed under the respective Acts and not merely by the date of filing return under Section 139(1) of the Act.

6.

In view of the binding precedent of the Hon’ble Supreme Court and Hon’ble High Court, we find no infirmity in the order of the Ld. CIT(A). Accordingly, the grounds raised by the assessee are dismissed.

7.

In the result, both the appeals filed by the assessee are dismissed.

The order is pronounced in the open Court on 15.06.2026.

Sd/- Sd/- (RAHUL CHAUDHARY) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT (True Copy) Ahmedabad; Dated 15.06.2026 MV

ITA Nos. 852-853/Ahd/2026 Asst. Years: 2020-21 & 2021-22 - 5– आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A)- 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy

सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad

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