In the case between Libra Biotech Pvt Ltd and Ward-2(3)(4) at Delhi, with case number ITA 1267/DEL/2021, the Income Tax Appellate Tribunal (ITAT) Delhi was tasked with deciding on the allowability of delayed employee contributions to the Employees’ State Insurance (ESI) and Provident Fund (EPF). Filed on September 29, 2021, the final order was pronounced on February 28, 2022, under the Final Tribunal Order type.
The main legal issue at hand involved the interpretation and application of sections 36(1)(va) and 43B of the Income Tax Act, 1961, concerning the deductions for employee contributions to welfare funds. The tribunal’s decision focused on whether such contributions paid beyond the statutory due dates but before the due date of filing the income tax return are allowable as deductions.
The tribunal, referencing various precedents and statutory provisions, concluded that contributions paid before the income tax return filing date are allowable. This decision aligns with the amendments made by the Finance Act, 2021, which clarified the non-applicability of Section 43B to such contributions, ensuring that employers are not penalized for delays if contributions are made before the filing date.
This case sets a significant precedent for the treatment of delayed employee contributions to ESI and EPF. It highlights the judiciary’s stance on encouraging compliance without unduly penalizing employers for procedural delays, as long as they meet the extended deadlines set by tax filing requirements. This decision is particularly relevant for employers managing large workforces and numerous statutory compliance requirements.
The ITAT’s ruling in the case of Libra Biotech Pvt Ltd vs Ward-2(3)(4) at Delhi provides crucial clarity on the handling of employee welfare fund contributions under the Income Tax Act. By allowing the deduction for contributions made before the tax return filing deadline, the tribunal ensures that the legislative intent of employee welfare is not compromised by rigid procedural requirements.
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