Case Number: ITA 1137/DEL/2021
Appellant: Alpha Teknisk Pvt. Ltd., New Delhi
Respondent: Income Tax Department, CPC, Bengaluru
Assessment Year: 2019-20
Case Filed On: 2021-09-16
Order Type: Final Tribunal Order
Date of Order: 2022-02-28
Pronounced On: 2022-02-28
Alpha Teknisk Pvt. Ltd., a company based in New Delhi, filed an appeal against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal, CPC, Bengaluru, concerning the assessment year 2019-20. The case primarily revolved around the disallowance of employee contributions to the Employees’ State Insurance Corporation (ESIC) and Provident Fund (PF) under Section 36(1)(va) of the Income Tax Act, 1961, due to delayed payment.
The Tribunal noted that the appellant had filed the return of income on time and the contributions towards ESIC and PF were indeed deposited before the due date for filing the return under Section 139(1) of the Income Tax Act. However, the disallowance was made by the Assessing Officer (AO) on the grounds that the contributions were not made within the due dates prescribed under the respective Acts (ESI and PF Acts).
The Tribunal carefully considered the arguments presented by both the appellant and the representatives of the Department. It reviewed various judicial precedents, including the decisions of the Supreme Court and High Courts, as well as the amendments introduced in the Finance Act, 2021, which clarified the provisions related to the treatment of employee contributions under Section 36(1)(va) and Section 43B.
The Tribunal referred to several judgments where it was held that employee contributions to PF and ESIC, if paid before the due date of filing the income tax return, are allowable deductions and should not be disallowed. Notable cases included:
The Tribunal also considered contrary judgments where disallowance was upheld due to late payments beyond the due dates specified under the respective Acts. These included decisions by the Gujarat High Court and the Delhi High Court in CIT vs. Bharat Hotels Ltd., where it was held that contributions not deposited within the prescribed time are not allowable deductions.
After a comprehensive review of the facts, legal provisions, and judicial precedents, the Tribunal concluded that the contributions towards ESIC and PF made by Alpha Teknisk Pvt. Ltd. before the due date for filing the income tax return under Section 139(1) should be allowed as deductions. The Tribunal directed the Assessing Officer to delete the disallowance and allow the deductions claimed by the appellant.
In the result, the appeal of Alpha Teknisk Pvt. Ltd. was allowed.
Order pronounced in the open Court on 28.02.2022.
Judicial Member: Sh. Saktijit Dey
Accountant Member: Dr. B. R. R. Kumar
For Assessee: None
For Revenue: Shri Umesh Takyar, Sr. DR
Date of Hearing: 21.02.2022
Date of Pronouncement: 28.02.2022
This case highlights the importance of timely depositing employee contributions to ESIC and PF to avoid disallowance under the Income Tax Act. The Tribunal’s decision underscores the principle that payments made before the due date for filing the income tax return should be allowed as deductions, providing clarity and consistency in the interpretation of the relevant provisions.
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