Case Number: ITA 1771/DEL/2021
Appellant: Rajesh Kumar Singh, Gurgaon
Respondent: ITO, Ward-3(1), Gurgaon
Assessment Year: 2019-20
Case Filed on: 2021-11-26
Order Type: Final Tribunal Order
Date of Order: 2022-02-28
Pronounced on: 2022-02-28
The case involves Rajesh Kumar Singh, the appellant, challenging the disallowance of contributions towards Employees’ Provident Fund (EPF) and Employees’ State Insurance (ESI) by the Income Tax Officer (ITO), Ward-3(1), Gurgaon. The disallowance was made on the grounds that the contributions were deposited after the due date prescribed under the respective Acts, though they were deposited before the due date for filing the income tax return.
The case was heard before the Income Tax Appellate Tribunal, Delhi Bench ‘G’, New Delhi, presided over by Sh. Saktijit Dey, Judicial Member, and Dr. B. R. R. Kumar, Accountant Member, through video conferencing.
The appellant was represented by Mr. Upvan Gupta, Advocate, while the revenue was represented by Shri Umesh Takyar, Senior Departmental Representative (DR).
The main contention of the appellant was that the EPF and ESI contributions were indeed deposited before the due date for filing the income tax return under Section 139(1) of the Income Tax Act, 1961. The appellant argued that according to various judicial precedents and the amendments introduced by the Finance Act, 2021, such deposits should be considered allowable deductions.
The revenue, on the other hand, maintained that the contributions were not eligible for deduction as they were not deposited within the due dates prescribed under the respective Acts, thereby justifying the disallowance under Section 36(1)(va) of the Income Tax Act.
The Tribunal examined the amendments introduced by the Finance Act, 2021, the Memorandum explaining these provisions, and a plethora of judicial decisions from various High Courts and the Supreme Court.
Notably, the Tribunal referenced several decisions which have held that if the employees’ contribution to EPF and ESI is deposited before the due date of filing the income tax return, no disallowance should be made. These decisions include:
The Tribunal also took into consideration the decisions that have ruled against such allowances based on the judgments of the Hon’ble High Courts of Delhi, Madras, Bombay, and Kerala. Specifically, the judgments in:
After careful consideration of the facts, arguments, and judicial precedents, the Tribunal concluded that the disallowance of EPF and ESI contributions under Section 36(1)(va) was not justified as the payments were made before the due date for filing the income tax return. Consequently, the appeal filed by Rajesh Kumar Singh was allowed, and the disallowance made by the ITO was directed to be deleted.
In conclusion, the Tribunal’s decision aligns with the view that timely payment before the income tax return filing date should be considered for deduction purposes, providing clarity on the treatment of delayed EPF and ESI contributions.
Order pronounced in the open court on 28/02/2022.
Signed by:
Sh. Saktijit Dey, Judicial Member
Dr. B. R. R. Kumar, Accountant Member
Dated: 28/02/2022
Subodh Kumar, Sr. PS
Copy forwarded to:
Assistant Registrar
Rajesh Kumar Singh vs. ITO, Ward-3(1), Gurgaon: EPF & ESI Contributions Case
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform