INCOME TAX ACT, 1961

Sections 36(1)(va) and 43B

Business deduction under section 36(1)(va) - Employees' contributions of ESI and PF - Paid before due date of filing of return of income under section 139(1) -

Assessee filed it return of income for relevant assessment year. CPC processed its return and passed an order under section 143(1) in which it made an adjustment by disallowing deduction in respect of employees' contribution of ESI and PF under section 36(1)(va). Assessee submitted that since the employees' contribution of ESI and PF was paid before due date of filing of the return; the CPC should have allowed the deduction in respect of the same. On appeal, CIT (A) upheld such disallowance. Held: Admittedly and undisputedly, employees' contribution to ESI and PF collected by assessee from its employees had been deposited well before due date of filing of return of income under section 139(1). It has been consistently held in various judicial pronouncements that where PF and ESI dues are paid after due date under respective statues but before filing of the return of income under section 139(1), the same cannot be disallowed under section 43B read with section 36(1)(va). Thus, disallowance made by CPC towards delayed deposit of the employees' contribution towards ESI and PF though paid well before the due date of filing of return of income under section 139(1) was accordingly, deleted.

REFERRED : CIT v. M/s. State Bank of Bikaner & Jaipur and Jaipur Vidyut Vitaran Nigam Ltd. (2014) 363 ITR 70 (Raj) : 2014 TaxPub(DT) 1436 (Raj-HC), CIT, Jaipur-II V. Jaipur Vidyut Vitran Nigam Ltd and Rajasthan Rajya Vidyut Utpadan Nigam Ltd (2014) 363 ITR 307 (Jp) : 2014 TaxPub(DT) 1578 (Jp-Trib), CIT, Udaipur v. M/s. Udaipur Dugdh Utpadak Sahakari Sangh Limited (2014) 366 ITR 163 (Raj) : 2014 TaxPub(DT) 3815 (Raj-HC), Principal CIT , Jaipur v. M/S Rajasthan State Beverages Corpn. Ltd 2017 TaxPub(DT) 3917 (SC)

FAVOUR : In assessee's favour

A.Y. : 2018-19 & 2019-20

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