No Deduction Can Be Claimed If Employees' Contribution Deducted From Employee's Salary was Not Paid To Respective PF & ESI A/c: Kolkata ITAT

Finding that the returns of the assessee have been processed in the Computer Processing Centre, the Kolkata ITAT ruled that if the Auditors have reported in the Audit Report that employees' contribution have been deducted by the assessee from the salaries of the employees but not deposited within due date provided under PF&ESI Act then no deduction can be claimed by assessee. The ITAT gave such ruling while referring to the law laid down by the Apex Court in the case of Checkmate Services (P) Limited –vs.- CIT reported in 143 taxmann.com 178. The Bench of Rajpal Yadav (Vice-President) and Dr. Manish Borad (Accountant Member) observed that “if employees' contribution is not being paid to the respective PF & ESI Acts, then, deduction cannot be claimed by an assessee”. (Para 9) As per the brief facts of the case, the assessee company preferred the present appeal challenging the action of CIT(A) in confirming the disallowance made by the AO on account of belated deposit of PF and ESI to the respective government account after the stipulated due date as per the Income tax Act vis-a-vis PF Act. The Bench observed that a Court decides a dispute between the parties, and the cause can involve the decision on facts as well as involve a decision on points of law, which may have bearing on the ultimate result of the case. When a Court interprets a provision, it decides as to what is the meaning and effect of the words used by the legislature, and it is a declaration regarding the statute, added the Bench. Thus, the Bench explained that the judgment declares as to what the legislature had said at the point of promulgation of the law, and the declaration is – this was the law, this is the law, and this is how the provision shall be construed. Hence, the ITAT concurred with the decision of the I-T Authorities and dismissed the appeal of the assessee. Counsel for Appellant/ Assessee: Miraj D. Shah Counsel for Respondent/ Revenue: P.P. Barman Case Title: Jankalyan Vinimay Pvt. Ltd. verses Deputy Commissioner of Income Tax Case Number: ITA. No. 776/KOL/2022 Click here to read/ download the Order

No Deduction Can Be Claimed If Employees' Contribution Deducted From Employee's Salary was Not Paid To Respective PF & ESI A/c: Kolkata ITAT

Pankaj Bajpai

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