Author – Neha Agarwal (Banasthali Vidyapith, Rajasthan)
Kerala High Court in case of The Commissioner Of Income Tax v. M/S Harrisons Malayalam Ltd held that the deduction under Section 36(1)(va) of Income Tax Act, 1961 cannot be granted if such payment was made after the due date
In the present case, the respondent/assessee is a company engaged in the manufacture/production of tea, rubber etc. During its assessment, the AO(Assessing Officer) disallowed the delayed payments made to Employees’ Provident Fund, Labour Welfare Fund and Employees’ State Insurance was allowable as a deduction under section 36(1)(va) of Income Tax Act.
An appeal has been filed challenging the order dated 14.05.2015 of the Income Tax Appellate Tribunal, Cochin Bench, in which tribunal upheld the order of the AO.
The respondent claimed that the contributions which are deducted at the time of payment of salary is received by the employer-company and is treated as income u/s 2(24). On remittance of this contribution, within the due date, it is allowed as a deduction under Section 36.
The Kerala High Court bench headed by Justices Abdul Raheem and R Narayana Pisharadi held that tribunal has found that payments have to be made only before the due date prescribed under Section 139(1) of the Act for filing return of income to claim the benefit under Section 36(1)(va) of the Act. The finding of the Tribunal in this regard is liable to be set aside. Moreover, the Tribunal has directed that the issue regarding deduction under Section 36(1) (va) of the Act has to be reconsidered by the assessing officer.
In the instant case, the assessee has got no plea that the remittance of employees’ contribution to Employees’ Provident Fund, Labour Welfare Fund, Employees’ State Insurance had been made before the due date prescribed in the respective enactments. Therefore, the direction given by the Tribunal remitting this issue for reconsideration by the assessing officer is also liable to be set aside.
Hence, the appeals are partly allowed. The impugned order of the Income Tax Appellate Tribunal, concerning delayed in payment of employees’ contribution to Employees’ Provident Fund, Labour Welfare Fund and Employees’ State Insurance in favour of the assessee is set aside.
To Read Judgment: Click Here!
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