Pune ITAT Supports Disallowance for Late Deposit of PF & ESIC U/S 36(1)(va)

Kothari Wheels filed an appeal against the order of the CIT(A) concerning the disallowance of late deposit of Employees’ shares of PF and ESIC has been supported by ITAT Pune.

Throughout the AY 2018-19, the CPC, Bengaluru made a disallowance of Rs. 93,37,905/- because of the late deposit of employees’ share of PF and ESIC by Kothari Wheels. CIT(A) confirms the same disallowance leading to the petition before ITAT Pune.

The case is concerned with the interpretation of Section 36(1)(va) of the Income Tax Act, 1961, which demands employers to deposit employees’ contributions to PF and ESIC within the specified time under separate statutes.

Kothari Wheels claimed that as the payments were made before the deadline for filing the income return under Section 139(1) of the Act, disallowance must not apply.

ITAT Pune, directing to a similar case precedent, led that the deduction under Section 36(1)(va) can just be claimed if the employees’ share is deposited before the deadline defined in the respective Acts.

Even after the argument of Kothari Wheels that the adjustment made by the CPC under Section 143(1) was outside the scope of the provision, ITAT Pune supported the disallowance, remarking that the CPC could not go beyond the income return and accompanying documents.

The filed petition of the Kothari Wheels is dismissed by the ITAT Pune confirming the disallowance of the late deposit of employees’ share of PF and ESIC. The same ruling highlights the importance of timely compliance with legal provisions for PF and ESIC contributions.