Case Number: ITA 2354/Del/2022
Appellant: ACIT, Circle 49(1), Delhi
Respondent: Richa & Co., Delhi
Assessment Year: 2018-19
Case Filed on: 2022-09-23
Order Type: Final Tribunal Order
Date of Order: 2023-09-14
Pronounced on: 2023-09-14
The appeal by the Revenue challenged the decision of the CIT(A) which had deleted the addition of Rs. 3,04,32,692/- pertaining to the late deposit of employees’ contributions to PF/ESIC for the Assessment Year 2018-19.
The Revenue contested the CIT(A)’s deletion of the addition, arguing that the contributions were not deposited within the due dates stipulated under the relevant funds, which should attract disallowances under Section 36(1)(va) of the IT Act. The issue was accentuated by the introduction of Explanation 2 to Sec. 36(1)(va), which clarifies the non-applicability of Sec. 43B for determining the ‘due date’.
The Tribunal referred to the Supreme Court’s judgment in Checkmate Services Pvt. Ltd. vs. CIT, which set a precedent for treating employees’ contributions to PF/ESIC, if not deposited by the due dates, as income of the employer. Consequently, the Tribunal upheld the Revenue’s position but remitted the matter back to the AO for verification of the assessee’s claim that delays were due to the ‘due date’ falling on a Sunday, and thus permissible.
Outcome: The Tribunal allowed the Revenue’s appeal subject to verification of specific deposit delays due to the due date falling on non-working days.
Order pronounced in the open court on: 14th September, 2023.
ACIT vs. Richa & Co. – Appeal on Employees’ Contributions Dispute for AY 2018-19
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