Delhi High Court allows Deduction to EPF Contribution as Due Date Fell on National Holiday

Delhi High Court allows Deduction to EPF Contribution as Due Date Fell on National Holiday

Dismisses the assessing officer’s contention that the employee should have made the deposit on August 15 and not a day later

The Delhi High Court has allowed the deduction for the employee’s contribution towards the provident fund (PF) as the due date fell on a national holiday.

The bench of Justice Rajiv Shakdher and Justice Girish Kathpalia observed that since the due date fell on a date that was a national holiday, the deposit could have been made by the respondent or assessee only on the date that followed the national holiday.

The respondent/assessee submitted that the deposit of the employee’s contribution towards the provident fund was made on August 16, 2018, following a national holiday on August 15.

The deduction claimed would have to be allowed, as steps had been taken by the respondent/assessee towards the deposit of the amount on August 14.

However, since the due date was August 15, the Assessing Officer (AO) disallowed the deduction.

Thereafter, the assessee filed an appeal before the tribunal, which held that even if employees’ contributions concerning the PF and insurance were deposited beyond the date prescribed under the statute, it would be allowable as deduction to the employer or the assessee.

On the other hand, the department contended that the assessee deposited the employee’s contribution towards the PF amounting to Rs.1,56,12,404 on August 16. Thus, the AO had rightly disallowed the deduction, as the due date was August 15.

However, the Court dismissed the department's appeal. It held that the contribution to the Employee’s Provident Fund is allowable as deposited immediately after a national holiday.