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Judgment
This appeal arises from an order dated 28th June, 2009 passed by the Income Tax Appellate Tribunal, Cuttack (ITAT) in ITA No. 123/CTK/2008
for the Assessment Year (AY) 2002-03. Counsel for the Appellant Assessee states that he is pressing only one question concerning the disallowance
of the employees’ contribution amount under the Employees Provident Fund and Miscellaneous Pension Act, 1952 (‘EPF Act’).
Admit. The following question of law is framed for consideration:
“Whether in the facts and under the circumstances of the case the Tribunal was legally justified to confirm the disallowances of Employees Contribution made at
Rs.70,70,127/-and correctly held that the deduction of the amount is not allowable even if the contribution is made before and within the due date of filing of return
U/s. 139(1) of the Income Tax Act?â€
In the present case, it is not in dispute that before filing the return of AY in question the Appellant Assessee had made the above contribution of
Rs.370,70,127/- being the employees’ contribution of Provident Fund (PF). However, the Assessing Officer (AO) in the assessment order dated
29th December, 2006 disallowed it and added it back since it had not been paid within due date as prescribed under the EPF Act.
The Delhi High Court in CLT v. Aimil Ltd. (2010) 321 ITR 508 (Del)a nswered an identical question in favour of the Assessee and against the
Department. The High Court followed the decision of the Supreme Court inV inay Cement Ltd. (2009) 313 ITR (St.) 1 (SC) .It was accordingly,
held as under:
“19. We may only add that if the employees’ contribution is not deposited by the due date prescribed under the relevant Acts and is deposited late, the
employer not only pays interest on delayed payment but can incur penalties also, for which specific provisions are made in the Provident Fund Act as well as the ESI
Act. Therefore, the Act permits the employer to make the deposit with some delays, subject to the aforesaid consequences. In so far as the Income tax Act is
concerned, the assessee can get the benefit if the actual payment is made before the return is filed, as per the principle laid down by the Supreme Court in Vinay
Cement (2009) 313 ITR (ST.)1.â€
Accordingly the question framed is answered in favour of the assessee and against the Department. The impugned order of the ITAT and the
corresponding orders of the CIT(A) and AO stand modified to the above extent.
The appeal is disposed of in the above terms.
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