Case Number: ITA 1019/DEL/2021
Appellant: B M Gupta Estates Private Limited, New Delhi
Respondent: ITO, Ward-4(1), New Delhi
Assessment Year: 2018-19
Date of Filing: 2021-08-26
Order Type: Final Tribunal Order
Date of Order: 2022-02-28
Pronounced On: 2022-02-28
The case involves B M Gupta Estates Private Limited (hereinafter referred to as ‘the Appellant’) and the Income Tax Officer, Ward-4(1), New Delhi (hereinafter referred to as ‘the Respondent’). The core issue pertains to the allowability of contributions to Employees’ State Insurance (ESI) and Employees’ Provident Fund (EPF), which were deposited by the Appellant beyond the due dates as prescribed under the respective Acts but before the due date of filing the income tax return. The disallowance of these contributions under Section 36(1)(va) of the Income Tax Act, 1961, by the Respondent led to the filing of this appeal.
The Appellant, B M Gupta Estates Private Limited, filed its income tax return for the assessment year 2018-19. The Respondent made a disallowance of contributions to ESI and EPF under Section 36(1)(va) on the grounds of delayed deposit. According to the Respondent, the contributions were not deposited within the due dates prescribed under the respective Acts, although they were deposited before the due date of filing the income tax return under Section 139(1).
The disallowance was contested by the Appellant, leading to the filing of this appeal before the Income Tax Appellate Tribunal (ITAT), Delhi Bench ‘G’.
The main contention of the Appellant was that the contributions to ESI and EPF, though deposited late, were made before the due date of filing the income tax return as per Section 139(1). The Appellant argued that various judicial pronouncements have held that such contributions are allowable deductions if made before the due date of filing the return.
The Respondent, on the other hand, relied on the disallowance under Section 36(1)(va) and supported the contention that the contributions must be deposited within the due dates specified under the ESI and EPF Acts to qualify for deduction.
The ITAT, comprising Sh. Saktijit Dey, Judicial Member, and Dr. B. R. R. Kumar, Accountant Member, heard the arguments through video conferencing. The Tribunal referred to various judicial precedents and the amendments brought by the Finance Act, 2021.
The Tribunal noted that the Hon’ble Delhi High Court in the case of CIT vs. AIMIL Ltd. (321 ITR 508) had held that if the employees’ contribution to ESI and EPF is deposited before the due date of filing the return under Section 139(1), no disallowance can be made. Similar views were upheld by other High Courts and the Supreme Court in the case of CIT vs. Vinay Cement Ltd. (213 CTR 268).
The Tribunal also considered the amendments made by the Finance Act, 2021, which clarified that the provisions of Section 43B do not apply to employees’ contributions and that such contributions must be deposited within the due dates specified under the respective Acts.
The Tribunal held that in light of the judicial precedents and the amendments by the Finance Act, 2021, the disallowance made by the Respondent was not justified as the contributions were deposited before the due date of filing the return under Section 139(1). Therefore, the appeal filed by B M Gupta Estates Private Limited was allowed, and the disallowance of ESI and EPF contributions was deleted.
In the Income Tax Appellate Tribunal, Delhi Bench ‘G’, New Delhi
Before Sh. Saktijit Dey, Judicial Member, and Dr. B. R. R. Kumar, Accountant Member
(Through Video Conferencing)
Case No. ITA 1019/DEL/2021
Appellant: B M Gupta Estates Private Limited, New Delhi
Respondent: ITO, Ward-4(1), New Delhi
Assessment Year: 2018-19
Assessee represented by: Sh. Satyan Sethi, CA
Revenue represented by: Shri Umesh Takyar, Sr. DR
Date of Hearing: 21.02.2022
Date of Pronouncement: 28.02.2022
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
All these appeals deal with the issue of allowability of contributions received from employees towards ESI and EPF.
2. The solitary ground is directed against the disallowance under Section 36(1)(va) of the Income Tax Act, 1961, on account of delay in depositing the employee’s contribution of ESI and EPF. The Revenue contended that the amounts were paid beyond the due date prescribed under the ESI and PF Acts. However, there was no dispute that they were deposited before the due date of filing of the return under Section 139(1).
3. The CIT(A) held that the contributions were not paid before the due dates prescribed under the respective Acts and thus were not eligible for deduction under Section 36(1)(va).
4. Aggrieved, the Appellant filed appeals before the Tribunal.
5. We have heard the arguments of both parties and examined the relevant judicial precedents.
6. Co-ordinate Benches of the Tribunal have held that employees’ contributions to PF and ESI, if paid before the due date of filing the income tax return under Section 139(1), are allowable deductions. This view is supported by various decisions, including the ITAT, Hyderabad in Crescent Roadways Pvt. Ltd. vs. DCIT, ITA.No.1952/Hyd/2018, and the ITAT, Delhi in DCIT vs. Dee Development Engineers Ltd., ITA.No.4959/Del./2016.
7. In light of these decisions and the amendments by the Finance Act, 2021, we hold that no disallowance is called for delayed payment of the employee’s contribution to ESI and EPF if deposited before the due date of filing the return under Section 139(1).
8. In the result, the appeals of the assessee are allowed, and the disallowance made by the Revenue is deleted.
Order pronounced in the Open Court on 28/02/2022.
Sd/-
(Saktijit Dey)
Judicial Member
Sd/-
(Dr. B. R. R. Kumar)
Accountant Member
Dated: 28/02/2022
Subodh Kumar, Sr. PS
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR: ITAT
Assistant Registrar
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