Business deduction under section 36(1)(va)–Employee’s contribution to Provident fund

CASE LAW DETAILS

CASE NAME:  High Volt Electricals (P.) Ltd. Vs  Asstt. CIT

DATE OF JUDGEMENT /ORDER: 26.09.2018

RELATED ASSESSEMENT YEAR: 2013-14

COURT: ITAT Mumbai

FACTS:

1. Assessee-company was engaged in the business of manufacturing and repair of electrical transformers had filed its return of income at Rs. 2,23,68,227/-. The return of income was processed as such under sec 143(1) of the Act. Subsquently , selected for scrutiny assessment under Sec 143(2).
2. During the course of the assessment, it was observed by A.O that assessee had deposited amount towards Employee’s contribution to Provident fund, beyond the stipulated date contemplated under the Provident Fund Act but before the due date of filing return of income under section 139(1)3.
3. Thus, as per amended section 43B, no disallowance could be made. Revenue submitted that section 43B was not applicable in respect of employee’s contribution and made disallowance under section 36(1)(va), read with section 2(24)(x)

HELD:

1. Following the judgment of High Court in CIT (Central) v. Ghatge Patil Transports Ltd. (2015) 228 Taxman 340 (Bom.): 2014 TaxPub(DT) 4175 (Bom-HC) wherein it was held that both the employees and employers contribution would be covered under the amended section 43B.
2. It was submitted by Ld. AR that as the observations of lower authorities were not in conformity with aforesaid judgement, the same could not be sustained and were liable to be vacated.
3. Therefore, Employee’s contribution to Provident fund, beyond the stipulated date contemplated under the Provident Fund Act but before the due date of filing return of income under section 139(1) could not be disallowed by invoking section 43B.