Case Number: ITA 1483/DEL/2021
Appellant: Kutumbh Care Private Limited, New Delhi
Respondent: ITO, Ward-14(4), Delhi
Assessment Year: 2019-20
Case Filed On: 2021-10-21
Order Type: Final Tribunal Order
Date of Order: 2022-02-28
Pronounced On: 2022-02-28
Case Conclusion: In the Income Tax Appellate Tribunal, Delhi Bench ‘G’, New Delhi
Judicial Members: Sh. Saktijit Dey, Judicial Member and Dr. B. R. R. Kumar, Accountant Member
Introduction: The case involves the allowability of contributions received from employees towards ESI and EPF under Section 36(1)(va) of the Income Tax Act, 1961. The primary issue is whether the contributions made by the employees, which were deposited by the employer before the due date of filing the return, are allowable as deductions.
The appellant, Kutumbh Care Private Limited, New Delhi, filed an appeal against the disallowance made by the Assessing Officer (AO) under Section 36(1)(va) for delayed deposits of employee contributions towards ESI and EPF. The disallowance was made on the grounds that the contributions were not deposited within the due dates as prescribed under the ESI and EPF Acts.
The AO contended that the amounts, though deposited before the due date of filing the return, were delayed as per the due dates under the respective Acts, and hence, not allowable as deductions.
Appellant’s Argument: The appellant argued that the employee contributions were deposited before the due date of filing the income tax return under Section 139(1) and thus should be allowable as deductions. The appellant relied on various tribunal orders and high court judgments supporting their claim.
Respondent’s Argument: The respondent argued that the contributions were not deposited within the due dates prescribed under the ESI and EPF Acts, and hence, the disallowance under Section 36(1)(va) was justified.
The Tribunal considered various judgments and amendments, including the Finance Act 2021, which clarified that the provisions of Section 43B would not apply to employee contributions covered under Section 36(1)(va).
The Tribunal noted that the amendments made by the Finance Act 2021 to Section 36(1)(va) and Section 43B clarify that employee contributions are to be considered separate from employer contributions and are not covered by the relaxations provided under Section 43B. However, considering the judicial precedents and the specific circumstances, the Tribunal held that no disallowance is called for if the contributions are deposited before the due date of filing the return under Section 139(1).
The Tribunal allowed the appeal filed by Kutumbh Care Private Limited, New Delhi, and directed that the disallowance made under Section 36(1)(va) be deleted. The Tribunal emphasized the importance of judicial discipline and consistency in following precedents while delivering judgments.
Order Pronounced in the Open Court on 28/02/2022.
Judicial Members: Sh. Saktijit Dey and Dr. B. R. R. Kumar
Kutumbh Care Private Limited vs. ITO: Allowability of ESI and EPF Contributions for AY 2019-20
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