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2021 (3) TMI 810 - AT - Income TaxAddition of salary and wages expenses - HELD THAT:- CIT(A) herself has accepted that there is increase in profit during the year as compared to preceding year and also the Assessing Officer has not pointed out any specific instance of the defect. She also taken note of the decisions cited by the authorized representative of the assessee. When no specific defect in bills or voucher has been pointed of by the Assessing Officer, no addition on adhoc basis can be sustained in view of the decisions above.Accordingly, we delete the addition which was sustained by the Learned CIT(A). The ground No. 1 of the appeal of the assessee is accordingly allowed. Disallowance for late payment of employees contribution to ESI and PF - HELD THAT:- As per the provisions of the Act, if employees’ contribution is paid to the respective department after due date as specified in respective enactment, the employer shall not be allowed deduction under the head ‘profit and gains of the business’. There is a distinction between employer and employee contribution to ESI/EPF. If contribution of the employee is deducted out of his salary and not paid to the respective department, it is the employer who enjoys the funds of the employee for his benefit in the business and the employee is deprived of interest accrued on said contribution. The employer hold the payment as a trustee till the due date of deposit provided in respect of enactment. The respective enactment has although provided deterrent to the employer in the form of interest and penalty after late payment, however the employee will be still deprived of the interest if the contribution is paid after the due date of deposit. In view of provision of section 36(1)(iv) Act, the employer is discouraged to make deposit of employees contribution to ESI/EPF after the due date prescribed in respective enactment. Thus, respectfully following the decision of Bharat Hotels Ltd [2018 (9) TMI 798 - DELHI HIGH COURT] the finding of the Ld. CIT(A) on the issue in dispute is upheld. The ground No. 2 of the appeal of the assessee is accordingly dismissed.
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