MAX VIGIL SECURITY PVT. LTD. V. ASST. COMMISSIONER OF INCOME TAX

TAXAP/1108/2018

AI Insights

Max Vigil Security Pvt. Ltd. filed an appeal against the Assistant Commissioner of Income Tax, challenging the judgment of the Income Tax Appellate Tribunal dated 22nd March 2018. The core issue was the interpretation of Section 36(1)(v)(a) read with Section 2(24)(x) of the Income-tax Act, 1961, concerning the disallowance of Rs. 2,32,83,560 added to the assessee's income for the Assessment Year 2013-2014. This amount represented the employees' contributions to Provident Fund and ESIC, which were allegedly not deposited within the statutory due dates. The High Court referenced a similar case, Commissioner of Income Tax vs. Gujarat State Road Transport Corporation, to affirm that such contributions must be credited to the employees' accounts in the relevant funds by the due dates to qualify for deductions under the Act.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 752452 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 10-09-2018
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax vs. Gujarat State Road Transport Corporation [2014] 366 ITR 170 [Guj.]
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: DARSHAN PATEL
• Keywords: Disallowance; Employees Contribution; ESIC; Income Tax; Provident fund
• Section: 2(24)(x); 36(1)(v)(a)

Judgement Text

"C/TAXAP/1108/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/TAX APPEAL No. 1108 of 2018 ============================================================= MAX VIGIL SECURITY PVT. LTD. Versus ASST. COMMISSIONER OF INCOME TAX ============================================================= Appearance : Mr DARSHAN R PATEL, Advocate for the PETITIONER(s) No. 1 for the RESPONDENT(s) No. 1 ============================================================= CORAM: HONOURABLE Mr. JUSTICE AKIL KURESHI and HONOURABLE Mr. JUSTICE B.N. KARIA 10th September 2018 ORAL ORDER (PER : HONOURABLE Mr. JUSTICE AKIL KURESHI) This Appeal is filed by the assessee to challenge the judgment of the Income Tax Appellate Tribunal, Ahmedabad dated 22nd March 2018. The following question is presented for our consideration : “Whether on the facts and evidence on record, the Tribunal has seriously erred in law in interpreting provisions of Section 36 [1] (v)(a) read with Section 2 [24](x) of the Income-tax Act, 1961 for confirming addition / disallowance of Rs. 2,32,83,560/= made by the Assessing Officer ?” Page 1 of 3 C/TAXAP/1108/2018 ORDER For the AY 2013-2014, the Assessing Officer had made addition of a sum of Rs. 2.32 Crore [rounded off] to the total income of the assessee on the ground that the employees’ contribution of Provident Fund and ESIC was not deposited by the assessee within due dates specified under the law. Learned counsel for the assessee candidly stated that such an issue has been examined by this Court in the case of Commissioner of Income Tax vs. Gujarat State Road Transport Corporation, reported in [2014] 366 ITR 170 [Guj.]. In such decision, this very issue came up for consideration wherein it was held as under:- “8. In view of the above and for the reasons stated above, and considering section 36(1)(va) of the Income Tax Act, 1961 read with sub-clause (x) of clause 24 of section 2, it is held that with respect to the sum received by the assessee from any of his employees to which provisions of sub-clause (x) of clause (24) of section (2) applies, the assessee shall be entitled to deduction in computing the income referred to in section 28 with respect to such sum credited by the assessee to the employees account in the relevant fund or funds on or before the due date mentioned in explanation to section 36(1)(va). Consequently, it is held that the learned tribunal has erred in deleting respective disallowances being employees contribution to PF Account / ESI Account Page 2 of 3 C/TAXAP/1108/2018 ORDER made by the AO as, as such, such sums were not credited by the respective assessee to the employees accounts in the relevant fund or funds (in the present case Provident Fund and/or ESI Fund on or before the due date as per the explanation to section 36(1)(va) of the Act i.e. date by which the concerned assessee was required as an employer to credit employees contribution to the employees account in the Provident Fund under the Provident Fund Act and/or in the ESI Fund under the ESI Act.” In the result, this Tax Appeal is dismissed. [Akil Kureshi, J.] [B.N Karia, J.] Prakash Page 3 of 3 "