ITAT: PF & ESI Should Be Paid Before Deadline to Permit Deduction U/S 43B

Remediation for employees’ contribution to PF and ESI must be done prior to the due date to get permissible under Section 43B of the Income Tax Act, said the Bangalore Bench of the Income Tax Appellate Tribunal (ITAT).

The two-member bench consisting of George George K (Judicial Member) and Laxmi Prasad Sahu (Accountant Member) laid on the decision of the Supreme Court in the case of Checkmate Services (P.) Ltd. v. CIT, in which it was held that Section 43B(b) that do not cover the contribution of the employees to PF, ESI and others which the employers deduct from the salaries of the employees and the contribution to the employees would require to get deposited in the mentioned due date under Section 36(1)(va), i.e. due dates under the relevant employee welfare legislation like the PF Act, ESI Act, and others beneath the related employee welfare legislation like the PF Act, ESI Act, and others which comes beneath that shall be treated as an income in the employer’s hands under section 2(24).

The taxpayer served the intimation under section 143(1) via assessing the total income of Rs 1,49,85,533. The cause for the difference between the income return and the assessed income under section 143(1) was because of the disallowance of the late remittance of the employee’s contribution to PF and ESI.

The taxpayer chooses the petition to CIT(A). The CIT(A) tracked the difference between the employer and contributions to PF and ESI and mentioned that merely the contribution to PF and ESI would be qualified to be the deduction when the same would be furnished before the last date of filing the income return.

The taxpayer, the payment of the employee’s contributions to PF and ESI was late and provided prior to the last date of income return filing under section 139(1) of the income tax act and was permissible under section 43B.

ITAT sustained the order of the CIT(A) and has refused the taxpayer’s petition.