The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that deduction is allowable towards the delayed payment of the employee’s contribution to Provident Fund ( PF )and ESI before filing the Return of Income (ROI).
Gulermak –TPL Pune Metro Joint Venture, the assessee challenged the order of the first appellate authority in upholding the adjustment, made by the Centralized Processing Centre Bengaluru while processing income tax returns under section 143(1) based on certain inputs from the tax audit reports of the assessee in question, in respect of the disallowance on account of delay in making the payment towards the employees’ contribution for the provident fund and ESI dues, under section 36(1)(va) r.w.s. 2(24)(x) of the Act.
It was evident that the Assessing Officer CPC cannot take a view contrary to the view taken by the High Court- more so when his attention was specifically invited to the binding judicial precedents in this regard. For this reason, also, the inputs in question in the tax audit report cannot be reason enough to make the impugned disallowance.
While preparing the tax audit report, the auditor is expected to report the information as per the provisions of the Act, and the tax auditor has done that, but that information ceases to be relevant because, in terms of the law laid down by Courts, which binds all of us as much as the enacted legislation does, the said disallowance does not come into play when the payment is made well before the due date of filing the income tax return under section 139(1).
Respectfully following the view taken above by the coordinate bench, the ITAT bench comprising of Pramod Kumar (Vice President), and Aby T. Varkey (Judicial Member) directed the Assessing Officer to delete the impugned disallowances, on account of, what is termed as, delayed payments of PF and ESI contributions. The appeals were allowed.
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