COMMISSIONER OF INCOME TAX-I vs. SHYOURAJ SINGH B CHAUHAN

Facts

The assessee, engaged in providing security services, filed its return of income for Assessment Year 2007-08 declaring a total income of Rs. 31,18,680. The Assessing Officer (AO) assessed the total income at Rs. 61,06,276, making additions and initiating penalty proceedings. The assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who allowed the appeal. The Revenue then appealed to the Income Tax Appellate Tribunal (ITAT), which dismissed the Revenue's appeal. The Revenue has filed the present appeal before the High Court against the ITAT's order.

Held

The High Court held that the issue concerning the deletion of the addition for late payment of PF/ESIC was concluded by its own prior decision in Commissioner of Income Tax v. Gujarat State Road Transport Corporation, [2014] 366 ITR 170 (Guj). In that case, it was held that if an assessee fails to credit the employees' contribution to the relevant fund on or before the due date specified in the Explanation to Section 36(1)(va), such amount is not eligible for deduction in computing income under Section 28. Therefore, the question of law was answered in the negative, in favour of the Revenue and against the assessee. The impugned judgment and order of the ITAT were quashed and set aside. The appeal was allowed.

Key Issues

1. Whether the Appellate Tribunal has substantially erred in deleting the addition of Rs. 29.29 Lacs, which was made on account of late payment of PF/ESIC, and should have been treated as income of the assessee under Section 2(24)(x) and disallowed as a deduction under Section 36(1)(va) due to the late payment? Assessee's Contention: The judgment does not record any specific contentions made by the assessee before the High Court. However, the fact that the CIT(A) allowed the assessee's appeal and the ITAT dismissed the Revenue's appeal suggests the assessee's position was that the addition was incorrect. Revenue's Contention: The Revenue contended that the late payment of employees' contribution to PF/ESIC should be treated as income under Section 2(24)(x) and is not deductible under Section 36(1)(va) if not paid on or before the due date.