Supreme Court in Checkmate Services Pvt. Ltd. vs Commissioner of Income Tax-I C.A No. 2833/2016, observed that in order to avail deduction under Section 36(1)(va) and Section 43 of the Income Tax Act, 1961, employers have to deposit contributions under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 and the ESI Acton or before the due date prescribed under the respective enactments. The apex court observed that deduction cannot be claimed by employer as the contribution deducted from the income of employees are held in trust and they are not the employer’s income, nor are they heads of deduction per se in the form of statutory pay out. They are others’ income, monies, only deemed to be income, with the object of ensuring that they are paid within the due date specified in the particular law. They have to be deposited in terms of such welfare enactments. It is upon deposit, in terms of those enactments and on or before the due dates mandated by such concerned law, that the amount which is otherwise retained, and deemed an income, is treated as a deduction.
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