Contribution Collected From Employees If Not Deposited Within Due Dates Prescribed As Per PF & ESIC Act, Is Dis-Allowable: Mumbai ITAT

The Mumbai ITAT recently clarified that mere deposit of employee's contribution before due date of filing return of income as per Section 139 of Income tax Act, will not make it eligible for deduction. Vs. CIT 143 taxmann.com 178, the Bench of Prashant Maharishi and Narendra Kumar Choudhry reiterated that “such sum collected from employees if not deposited within the due dates prescribed under the respective Provident Fund and ESIC Act, is dis-allowable irrespective of the fact that the same were deposited before the due dates of filing of return of income”. On scrutiny, the AO found that in tax audit report employees' contribution of Rs.7,87,510/- has been paid beyond the due date prescribed under the Provident Fund Act. This is the employees' contribution, which should have been deposited before the due date prescribed under the respective Provident Fund Act. However, the Bench noted that such contributions were not deposited within due date specified under the respective Provident Fund and ESIC Act but were deposited within the due date prescribed for filing return of income.