Case Number: ITA 798/DEL/2021
Appellant: S.A.M. Apparels Pvt. Ltd., Delhi
Respondent: DCIT CPC, Bangalore
Assessment Year: 2018-19
Case Filed on: 2021-06-28
Order Type: Final Tribunal Order
Date of Order: 2022-02-28
Pronounced on: 2022-02-28
This case involves S.A.M. Apparels Pvt. Ltd., a company based in Delhi, which filed an appeal against the Deputy Commissioner of Income Tax (DCIT) CPC, Bangalore. The appeal challenged the disallowance of contributions to the Employees’ State Insurance (ESI) and Employees’ Provident Fund (EPF) made by the company for the assessment year 2018-19. The disallowance was based on the delayed deposit of these contributions.
The primary ground for the appeal was the disallowance under Section 36(1)(va) of the Income Tax Act, 1961. The appellant contended that although the contributions were deposited after the due date prescribed under the ESI and PF Acts, they were made before the due date for filing the income tax return under Section 139(1).
The case was heard by the Income Tax Appellate Tribunal (ITAT) Delhi Bench ‘G’ via video conferencing, with Sh. Saktijit Dey, Judicial Member, and Dr. B. R. R. Kumar, Accountant Member, presiding over the matter. The appellant was represented by Sh. Satyan Sethi, Adv., while the respondent was represented by Sh. Umesh Takyar, Sr. DR.
The appellant’s counsel argued that the contributions to ESI and EPF were made before the due date for filing the income tax return, as specified under Section 139(1) of the Income Tax Act. Therefore, the disallowance under Section 36(1)(va) was not justified. The appellant relied on various judgments of different high courts and tribunals which supported the claim that contributions deposited before the filing of the return should be allowed.
Upon reviewing the facts and submissions, the ITAT found that the appellant had deposited the ESI and EPF contributions before the due date for filing the income tax return under Section 139(1). The tribunal referred to several judgments and amendments in the Income Tax Act to support its decision:
The ITAT emphasized the principle of judicial discipline, stating that lower authorities are bound by the decisions of higher courts. It noted that conflicting decisions should be resolved by adhering to the judgments of jurisdictional high courts and the Supreme Court.
The tribunal concluded that no disallowance was called for in cases where employee contributions to ESI and EPF were deposited before the due date of filing the income tax return. Consequently, the ITAT ruled in favor of S.A.M. Apparels Pvt. Ltd., allowing the appeal and quashing the disallowance made by the DCIT CPC, Bangalore.
In conclusion, the ITAT ruled in favor of S.A.M. Apparels Pvt. Ltd., allowing the deduction of ESI and EPF contributions deposited before the due date for filing the income tax return. The tribunal’s decision was based on the interpretation of relevant provisions, judicial precedents, and amendments in the Income Tax Act, ensuring that the appellant’s claim for deduction was upheld.
Order pronounced in the open court on 28/02/2022
Signed:
Saktijit Dey, Judicial Member
Dr. B. R. R. Kumar, Accountant Member
Assistant Registrar, ITAT, New Delhi
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