Clearance of PF/ESI payment after the due date due to technical glitches/server issues is allowable as deduction: ITAT Ahemedabad
In a recent case, disallowance was made u/s. 36(1)(va) of the Income Tax Act for late deposit of employee’s contribution to PF/ESI.
The law in regard to payment of PF/ESIC after the due date of is well settled by the judgement of Hon’ble SC in the case of Checkmate Services Pvt. Ltd.
However, on studying the facts in detail in the present case, it was observed that the payments were made to PF/ESI funds on due date but the same got cleared on next date due to technical glitches/server issues.
The Hon’ble ITAT Ahmedabad appreciated the submissions made on behalf of the assessee and allowed the appeal holding that the assessee cannot be penalized when he has fulfilled his duty by making payment within the due date.
Though law is settled that late deposit of employee’s contribution to PF/ESI funds must be disallowed, observing such minute details of the case like date of presentation of cheque, payment within the grace period, etc. may increase your chances to succeed.
The Copy Of the Appellate is as under:
