2025 (7) TMI 1223 - AT - Income Tax

Delayed payment for PF ESI in the government account beyond the due date - Counsel argued that the payment is made within time and the due date should be considered in the month in which salary is reimbursed to the employees - HELD THAT - We are of the considered opinion that after the order of Checkmate Services 2022 (10) TMI 617 - SUPREME COURT (LB) there is hardly any scope for further interpretation on this issue. Therefore respectfully following the ratio decided (supra) we do not find any reason to interfere in the findings given by the CIT(A) in this case. Accordingly Assessee s appeal on different grounds and issues raised before us is dismissed.

Summary

ISSUES:

Whether the disallowance of employee contributions to Provident Fund (PF) and Employees' State Insurance (ESI) under Section 36(1)(va) read with Section 2(24)(x) of the Income Tax Act is justified when such contributions are paid after the salary month but within the due date prescribed by law.Whether the appellate authority erred in upholding the Assessing Officer's order passed under Section 154 of the Income Tax Act disallowing employee contributions despite their payment within the due date.Whether the delay in filing the appeal should be condoned.

RULINGS / HOLDINGS:

The Court held that the disallowance of employee contributions to PF and ESI was justified as per the binding precedent set by the Hon'ble Supreme Court in 'M/s Checkmate Services Pvt. Ltd. Vs. CIT', which settled the law on late payment of such contributions, leaving "hardly any scope for further interpretation on this issue."The appellate authority did not err in upholding the Assessing Officer's order under Section 154 of the Income Tax Act disallowing the employee contributions, as the contributions were not paid within the prescribed due date, and the decision was consistent with statutory provisions and judicial precedent.The Court condoned the delay of 30 days in filing the appeal, finding the reasons stated in the affidavit satisfactory and noting no objection from the Revenue.

RATIONALE:

The Court applied the statutory framework of the Income Tax Act, specifically Sections 2(24)(x), 36(1)(va), 143(1), and 154, governing the timing and allowance of deductions for employee contributions to PF and ESI.The Court relied on the authoritative Supreme Court decision in 'M/s Checkmate Services Pvt. Ltd. Vs. CIT', which conclusively interpreted the timing for payment of employee contributions and disallowance consequences for late payments.The Court rejected the argument based on the ITAT Kolkata Bench decision, emphasizing the binding nature of the Supreme Court ruling and its precedence over tribunal decisions.The Court upheld the principle that contributions must be paid within the due date linked to salary disbursement month to qualify for deduction, and payments beyond that date are liable for disallowance.There was no dissenting or concurring opinion recorded in the judgment.