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2019 (2) TMI 1789

..... eal preferred by the assessee by holding that the PF / ESI contribution was not deposited within the prescribed time period set aside by ITAT - HELD THAT:- As decided in CHECKMATE FACILITY & ELECTRONIC SOLUTIONS P. LTD. VERSUS INCOME TAX OFFICER [2018 (3) TMI 1775 - ITAT AHMEDABAD] Section 38 of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 makes it obligatory for the employer before paying him his wages to deduct the employee's contribution along with the employer's own contribution as fixed by Government. The employer is further obliged to pay the same within fifteen days of the close of every month pay i.e. such contribution and administrative charges. The reference to fifteen days of the close of the month must be in relation to month during which the payment of wages is to be made and corresponding liability to deduct employee's contribution to the fund arises. This Court held that the expression “within fifteen days of the close of every month” therefore, must be interpreted as having reference to the close of the month, for which, the wages are required to be paid with corresponding duty to deduct employee's contribution .....

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..... held as under: 13. We have heard the respective parties and we have also perused the relevant materials available on record including the orders passed by the Coordinate Bench in assessee s own case. It further appears from the record that Ld. CIT(A) while confirming the orders passed by the Ld. AO relied upon the judgment passed by the jurisdictional High Court in the case of CIT vs. Gujarat State Road Transport Corporation, reported in (2014) 41 taxmann.com 100 (Guj.) holding that employees contribution to the Employees Provident Fund (EPF) Employees State Insurance Corporation (ESIC) deposited beyond the due date prescribed u/s. 36(I)(va) of the Income Tax Act, 1961 would not be eligible for deduction u/s. 438 of the Act even after deposited before the due date of filing of tax return. Upon perusal of the order passed by the Coordinate Bench we could understand that the Ld. Tribunal pleased lo direct the AO to decide whether there was any delay or not in making such payment by the assessee. It has further observed that any delay deposit of PF/ESIC is to be disallowed in terms of the Hon ble Gujarat High Court judgment as cited above. The relevant portion of the said judgment is .....

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..... ry but the one pertaining to its payment. He then files a computation chart indicating it to have paid above employees' PF/ESI contributions on 22.05.2009 and 28.05.2009 as against the due dates thereof following on 20.06.2009. The Revenue fails to dispute this factual position. We therefore quote this Tribunal's coordinate bench decision in Kami Paper & Industries Ltd. vs. ACIT 75 TTJ 448 that the relevant date in such case is that of month of the actual payment of wages / salaries. We therefore rely on the above coordinate bench decision and direct the Assessing Officer to delete the impugned disallowance as well. 4 In effect thus while any delayed deposit of PF/ESI is to be disallowed, in terms of Hon'ble Gujarat High Court's judgment in the case of Gujarat State Road Transport Corporation (supra), the question as to whether there is a delay or not may be decided by the Assessing Officer in the light of above observations by the coordinate bench. The assessee will get relief, if found admissible, on that basis. 5. In the result, appeals of the assessee are allowed for statistical purposes. 5 The Revenue being dissatisfied with the order passed by the Appellat .....

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..... icer was made considering the normal period of 15 days for making deposit and a further grace period of five days specified under the statute. Since the assessee was delayed in making the deposits even beyond such extended period, he applied the disallowance in terms of section 36(1)(va) of the Act. 3. Learned counsel for the appellant would not dispute that the issue of disallowance of late deposited employees contributions of PF and ESIC stands covered by the Division Bench judgment of this Court in case of Commissioner of Income Tax v. Gujarat State Road Transport Corporation reported in [2014] 366 ITR 170 (Guj). He however raised a slightly different contention which did not arise for consideration before this Court in case of Gujarat State Road Transport Corporation (supra). He submitted that in terms of section 38 of the Employees Provident Funds and Miscellaneous Provisions Act, 1952, reference to the time limit for depositing the contributions within 15 days of close of the month must be to the month in which the salary payment is made. For example, therefore if the salary payment for the month of June is made on 5th July, the employer would have time upto 15th of August fo .....

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..... s to be deposited with the Government within fifteen days of the close of every month. Reference to fifteen days of the close of the month must be in relation to the month during which the payment of wages is to be made and corresponding liability to deduct employee s contribution to the fund arises. The expression within fifteen days of the close of every month therefore must be interpreted as having reference to the close of the month, for which, the wages are required to be paid with corresponding duty to deduct employee s contribution and to deposit the same in the fund. 6. Learned counsel for the appellant is therefore not correct in contending that if such wages are paid in the following month, the liability to deposit the employee s contribution to the fund gets differed by another month. 7. Tax Appeal is therefore dismissed. 7 Thus, the dictum as laid in the aforesaid decision is that Section 38 of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 makes it obligatory for the employer before paying him his wages to deduct the employee's contribution along with the employer's own contribution as fixed by Government. The employer is further obliged t .....

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