ACIT, CHENNAI vs. EXPRESS PUBLICATIONS (MADURAI) LTD., CHENNAI

This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals) – 6, Chennai, dated 19.02.2016 and pertains to assessment year 2006-07.

The only issue arises for consideration is with regard to disallowance of employees’ contribution to the ESI and Provident fund.

Shri M. Murugaboopathy, the Ld. Departmental Representative, submitted that the assessee has to deposit the employees’ contribution to Provident Fund and ESI within the time limit prescribed under the Provident Fund and ESI Act. Referring to Section 36(1)(va) of the Income-tax Act, 1961 (in short 'the Act'), more particularly to Explanation, the Ld. D.R. submitted that due date means the date by which the assessee was required to credit the employees’ contribution to the employees’ account in the relevant fund under the relevant Rules, Act and Notification issued thereunder. In the case before us, according to the Ld. D.R., admittedly the employees’ contribution was not credited within the due date prescribed under the provisions of Provident Fund Act and ESI Act, therefore, the CIT(Appeals) is not justified in allowing the claim of the assessee.

On the contrary, Shri R.K.V. Sundar, the Ld.counsel for the assessee, submitted that even though Section 36(1)(va) of the Act provides for payment of employees’ contribution within the due date prescribed under relevant Act, Section 43B clearly says that the employees’ contribution or employer’s contribution cannot be allowed unless it is actually paid within the due date for filing of return of income under Section 139(1) of the Act. In this case, admittedly, the assessee has paid the employees’ contribution within the due date prescribed for filing of return under Section 139(1) of the Act, therefore, the claim of the assessee has to be allowed under Section 43B of the Act. According to the Ld. counsel, the provisions of Section 43B of the Act will override the other provisions of Income-tax Act.

I have considered the rival submissions on either side and perused the relevant material available on record. The CIT(Appeals) directed the Assessing Officer to allow the employees’ contribution towards PF and ESI subsequent to verification by the Assessing Officer that these amounts are paid before the due date for filing of return of income for the assessment year under consideration. The contention of the Revenue before this Tribunal is that when Section 43B was amended by Finance Act, 2003, there was no corresponding amendment in Section 36(1)(va) of the Act.

In the result, the appeal filed by the Revenue is dismissed.