ITO, WARD - 4(4), KOLKATA, KOLKATA vs. M/S. WESTERN CONGLOMERATE LTD., , KOLKATA

The assessee in the present case is a company which is engaged in the business of cultivation and manufacturing of tea. The return of income for the year under consideration was filed by it on 27.11.2014 declaring a total income of Rs. 36,320/-. During the course of assessment proceedings, it was noticed by the AO that the assessee has failed to pay the employees contribution to provident fund amounting to Rs. 85,87,070/- within the due dates. He accordingly invoked the provisions of section 2(24)(x) and section 36(1)(va) of the Act and made a disallowance of Rs. 85,87,070/-.

The disallowance of Rs. 85,87,070/- made by the AO on account of belated payment of employees contribution to provident fund was challenged by the assessee in the appeal filed before the Ld. CIT(A) and after considering the submissions made by the assessee and the material available on record, the Ld. CIT(A) directed the AO to delete the said disallowance after verifying the claim of the assessee that the employees contribution to provident fund was paid before the due date of filing the return after recording his findings / observations as under: “The assessment order framed in the light of the materials available on record before the assessing officer during the assessment proceedings. The AO observed that the assessee did not deposit the ESI and PF within the due dates as prescribed by the relevant Act and therefore disallowed the amount. I find that the matter is well settled by decisions of various judicial forums wherein it was ruled that as long as the deposits on account of PF/ESI were made before the filing of the return, the same would be allowable as deduction. Reference was made to the decision of the Hon’ble Calcutta High Court in the case of CIT vs Vijay Shree Ltd. wherein the Hon’ble High Court held that after referring to the decision of the Hon’ble Supreme Court rendered in the case of CIT vs Alom Extrusion Ltd. that the deposit of the employees contribution to Provident Fund and ESI would be allowable if the same is deposited within the due date of filing return of income.”