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Facts
The assessee filed its return of income showing 'NIL' income after deductions. The return was processed under section 143(1), and an addition of ₹37,68,900 was made on account of delayed deposit of employees' contribution to EPF/ESI. The assessee contended that the deposit was made before the due date of filing the return.
Held
The Tribunal, in this case and in its own case for a prior assessment year, held that if employees' contribution to EPF/ESI is not deposited within the stipulated due dates as per the relevant Acts, the deduction under section 36(1)(va) would not be available. However, regarding specific payments for October 2020, the Tribunal observed that based on the EPF Scheme, the liability arises on salary payment, and if salary for October was paid in November, the deposit within 15 days of November would be within the due date.
Key Issues
Whether the disallowance of employees' contribution to EPF/ESI due to delayed deposit beyond the due date under the respective Acts is justified, and whether the due date for deposit should be reckoned from the date of salary payment or the date when salary becomes due.
Sections Cited
143(1), 250, 139(1), 43B, 2(24)(x), 36(1)(va), 38
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Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH, KOLKATA
Before: SHRI SONJOY SARMA & SHRI RAKESH MISHRA
order
: 23-October-2025 ORDER
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2018-19 dated 28.11.2022, which has been passed against the intimation u/s 143(1) of the Act, dated 16.10.2019.
The assessee is in appeal before the Bench raising the following grounds of appeal:
1. That the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre erred in facts and on law in confirming the addition made in the intimation U/s 143(1) issued by the Ld. DCIT, CPC when the same was unlawful and arbitrary as the issue involved was debatable on facts and law.
“6. The ld. AR stated that he was not disputing the payments in respect of Sl. Nos. 1, 2 & 3 for EPFO which was admittedly belated and therefore, not allowable u/s 36(1)(va) r.w.s. 2(24)(x) of the Act and also in respect of ESIC at Sl. Nos. 1, 2 & 4 but requested that as the dues for the month of October 2020 relating to EPFO at Sl. No. 4 and that relating to ESIC at Sl. No. 3 for the month of October, 2020 [which is erroneously mentioned as May, 20 in the order of the Ld. CIT(A)] were paid in time, therefore, the same were allowable as a deduction as according to Section 38 of the PF Act, 1952, the due date is to be reckoned from the month in which salary is paid and not from the month for which the salary is due. Since the salary for October, 20 was paid in the month of November, the payment made on 17.11.2020 for amounts of Rs. 6,09,233/- and Rs. 46,787/- respectively was allowable as a deduction. He placed reliance on the decision of the Coordinate Benches in the case of Kanoi Paper & Industries Ltd. vs. ACIT reported in (2022) 75 TTJ (CAL) 448 as well as the in the case of The Master Polishers vs. ADIT in order dated 26.04.2023 and our attention was drawn to para 2 on Page 2 of the order placed at page 48 of the paper book in support of the claim. 6.1. We have considered the submission made In this respect, Section 38 of The Employees’ Provident Funds Scheme, 1952 is reproduced as under: “38. Mode of payment of contributions (1) The employer shall, before paying the member his wages in respect of any period or part of period for which contributions are payable, deduct the employee's contribution from his wages which together with his own contribution as well as an administrative charge of such percentage of