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Judgment
PER MANISH AGARWAL, AM:
This appeal is filed by the Assessee against the order of Learned Commissioner of Income Tax , Circle -16(1), New Delhi dated 17.06.2026 u/s 250 of the Income Tax Act, 1961 (“the Act” in short) arising out of the order passed u/s 154 of the Act dated 28.03.2019 for Assessment Year 2017-18.
Heard both the parties and perused the materials available on record. The CPC while processing the return of income of assessee has made total addition of Rs.55,05,436/- out of which a sum of Rs.54,66,082/- was made u/s 36(1)(va) of the Act on account of delayed payment of Employees Contributions towards PF.
Against the said order, the assessee filed a rectification application which was rejected by the CPC which has culminated into the present appeal before us. It was the claim of the assessee that the total disallowance made was of 54,66,092/-including disallowance made u/s 36(1)(va) of Rs. 49,40,943/- towards late payment of employees contribution of PF and balance Rs. 5,25,149/- is towards the payment made for Group insurance in lieu of EDLI. Ld. AR submits that as against the disallowance of Rs. 49,40,943/- made u/s 36(1)(va) of the Act towards for the delayed payment of employees contribution towards PF, the correct amount was of Rs. 38,34,437/-comprising of Rs. 24,63,106/- for the month of November, 2016 and Rs.24,77,837/- for the month of December, 2016. It is observed that the differential amount has already been rectified by the AO in terms of the order passed u/s 154 dt. 17.06.2025, the AO has reduced the disallowance at 42,50,159/-.
With respect to the disallowance of Rs.42,50,159/- it is the claim of the assessee was that the correct amount employer and employees contribution towards the month of November, 2016 was Rs.19,11,859/- and for the month of December-16, it was Rs. 19,22,578/- out of which Rs.14,09,545/- (7,02,900/- for November, 2016 and 7,06,645/- for December, 2016) pertained to employer contributions towards PF and since the said amount were deposited on or before the due date of filing of return, no disallowance should be made. For this the necessary copies of the challans were filed before us. Considering these facts, we direct the AO to delete the addition to the extent of Employer Contribution towards PF of Rs.14,09,545/-.
Regarding the disallowance of Rs.12,08,959/- made u/s 36(1)(va) towards the Employees Contribution for PF for the month of November, 2016 which was actually deposited on 13.12.2016 however, inadvertently the date of deposit was reported as 18.12.2016 in the Tax audit report. In support of this claim, a certificate issued by the banker is also produced before us. Considering these facts, when the assessee has deposited/paid the employees contribution towards PF within the due date prescribed under the respective Act, no disallowance should be made. Accordingly, the sum of Rs.12,08,959/- disallowed by the AO u/s 36(1)(va) is hereby deleted.
Now coming to the balance amount of Rs.12,15,933/- disallowed u/s 36(1)(va) of the Act towards Employees Contribution for the month of December, 2016, it is observed that the said amount was deposited on 23.01.2017, therefore, it was delayed under the respective Act. Thus, by respectfully following the judgment of the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. vs. CIT reported in [2022] 143 taxmann.com 178 (SC), the disallowance of Rs. 12,15,933/-is hereby sustained.
Besides this a sum of Rs. 5,25,149/- deposited on 14.07.2016 towards Group EDLI Master Policy was also disallowed. Since, this payment is not covered u/s 36(1)(va) of the Act and was paid on or before the due date of filing of return us/ 139(1) of the Act, therefore the same is allowable u/s 43B of the Act. Moreover, the payment to Group EDLI Master Policy had no relation with respect to any contribution made by the Employees and entire sum was paid by the Employer only, therefore, in terms of the section 43B of the Act, this sum being paid before the due date of filing of return u/s 139(1) of the Act is allowed. Accordingly, we hereby deleted the disallowance made of Rs.5,25,149/-.
In the result, the appeal of the Assessee is partly allowed.