ITAT: Payment Towards Employee’s Contribution To Provident Fund After Due Date Is Not Allowable As Deduction

Asstt. Director of Income Tax observed and has held that payment towards an contribution of an employee to the provident fund after the due date is not allowable as a deduction.
The two-member bench comprising of Judicial Member, Sandeep Singh Karhail and the Accountant Member, Om Prakash Kant in the case observed and has relied on the Supreme Court’s decision in the case of Checkmate Services (P.) Ltd, wherein the court has ruled that the non-obstante clause under Section 43B or anything contained in that provision would not absolve the assessee from its liability for depositing the contribution of employee on or before the due date as a condition for the deduction.
The return has been filed by the appellant or assessee of income on 10/02/2021, wherein the court declared a total income of Rs.459,03,58,100. The return was also being processed after an addition of Rs. 6,30,42,740 which was being made on account of delayed payment towards the employee’s contribution to the provident fund under Section 36(1)(va).
The appeal filed by the assessee was dismissed by CIT. If the employer fails for depositing the entire amount towards the employees’ contribution on account of the provident fund with the concerned department on or before the due date, the said assessee is not being entitled for the said compensation.
It has also been noted by the ITAT that the employee’s contribution to the provident fund was deposited by the assessee after the due date prescribed under the relevant statute but within the due date for filing the income tax return.
It has also been ruled by the ITAT that the claim of the taxpayer’s of deduction for the employee’s contribution to PF and ESI was incorrect, necessitating a prima facie adjustment.

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