This case involves Bhansali Udyog Pvt Ltd, New Delhi (the appellant) and the Deputy Commissioner of Income Tax, CPC Bangalore (the respondent). The core issue revolves around the disallowance of employee’s contribution to ESI and EPF under Section 36(1)(va) of the Income Tax Act, 1961, for the assessment year 2018-19.
The case, identified as ITA 897/DEL/2021, was filed on July 23, 2021. The final judgment was pronounced by the Income Tax Appellate Tribunal, Delhi Bench ‘G’, New Delhi, on February 28, 2022, and was delivered by Sh. Saktijit Dey, Judicial Member, and Dr. B. R. R. Kumar, Accountant Member.
The main contention in this case was the allowability of contributions received from employees towards ESI and EPF. The Deputy Commissioner of Income Tax disallowed the amount under Section 36(1)(va) due to the delay in depositing the contributions, despite the payments being made before the due date for filing the return of income under Section 139(1).
The appellant argued that these contributions should be allowed as deductions since they were deposited before the due date for filing the income tax return, aligning with several precedents set by various benches of the Tribunal and judgments from Hon’ble High Courts.
The tribunal examined several key judgments and amendments to the Income Tax Act to reach its decision. Notable among these were:
After considering the arguments and reviewing the relevant legal provisions and precedents, the tribunal held that:
The tribunal’s decision in Bhansali Udyog Pvt Ltd vs DCIT CPC, Bangalore reinforces the legal position that employee contributions to ESI and EPF, if deposited before the due date of filing the return, should be allowed as deductions. This judgment aligns with the legislative intent and judicial precedents aimed at ensuring compliance without unduly penalizing employers for delays in depositing employee contributions.
The detailed order of the tribunal, delivered by Sh. Saktijit Dey and Dr. B. R. R. Kumar, provides a comprehensive analysis of the relevant legal provisions and judicial interpretations, offering clarity on this contentious issue.
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