The Kolkata bench of the Income Tax Appellate Tribunal (ITAT) recently ruled that there is no distinction between employees’ and employer contribution to PF, and if the total contribution is deposited on or before the due date of furnishing return of income u/s 139(1) of the Income Tax Act, then no disallowance can be made towards employees’ contribution to provident fund.
Assessee, in the present case, is a limited company and engaged in the business of cultivation and manufacturing of tea. For the year under consideration, the assesse claimed deduction in respect of the amount deposited by its towards the Employees Provident Fund under the PF Act.
However, the Assessing Officer denied deduction by stating that the deposit was made after the due date prescribed under the PF Act.
However, assesse contended that the deduction is available to them since the deposit was made before the due date prescribed for filing of income-tax return in terms with the provisions contained in section 36(1)(va) of the Act and section 43B(b) of the Act.
Therefore, as per the scheme provided under the PF Act, the contributions means and include both employees’ and employer’s share. “Similarly, section 2(c) of the Provident Fund Act defines the contribution to mean a contribution payable in respect of a member under the scheme or the contribution payable in respect of an employee to whom the scheme applies. There is a prescribed mode of payment of contributions under the PF Act. Under the said Act, the employer shall contribute both employees and employer share along with administrative charges before the due date specified under the PF Act. The Act prescribed only one due date for depositing the contribution i.e. 15th of subsequent month with the grace period of 5 days which indicates that there is no difference between employee and employer contribution. If the legislature intends to differentiate employees and employer contribution, then there would have been two due dates like in the case of Income Tax Act. Therefore, from the above, it is clear that the Provident Fund Act does not differentiate employees and employer contribution and contribution means both employees and employer contribution under the PF scheme.”
After examining the provisions of section 43B of the Act, it said that any sum paid by the assessee on or before the due date of furnishing return of income u/s 139(1) of the Act, then no disallowance can be made under the provisions of section 43B of the Act.
“A careful consideration of section 43B of the Act, it is clear that an extension is granted to the assessee to make the payment of PF contributions or any other fund till the due date of furnishing return of income u/s 139(1) of the Act. Therefore, in our opinion, there is no difference between employees and employer contribution to PF and if such contribution is made on or before the due date of furnishing return of income u/s 139(1) of the Act, then deduction is to be allowed under the provisions of section 43B of the Act.”
Read the Full text of the Order Below
