Case Number: ITA 1763/DEL/2020
Appellant: Barmalt Malting (India) Private Limited, New Delhi
Respondent: DCIT CPC, Bangalore
Assessment Year: 2017-18
Case Filed On: 2020-10-23
Order Type: Final Tribunal Order
Date of Order: 2023-02-14
Pronounced On: 2023-02-14
This appeal, numbered ITA 1763/DEL/2020, was filed by Barmalt Malting (India) Pvt. Ltd against the order dated 21.08.2020 of the Commissioner of Income Tax (Appeals)-2, New Delhi, concerning the assessment year 2017-18. The appellant contested the disallowance of the late payment of Employee State Insurance (ESI) and Provident Fund (PF) contributions.
The case was heard by the Delhi Bench ‘A’ of the Income Tax Appellate Tribunal (ITAT) on February 9, 2023, with the order pronounced on February 14, 2023. The bench comprised Judicial Member Sh. C. M. Garg and Accountant Member Dr. B. R. R. Kumar.
The primary ground of appeal was the disallowance of the late payment of ESI and PF contributions by the employer. The appellant argued that the contributions were eventually deposited and should be allowed as deductions.
The tribunal referenced the decision of the Hon’ble Supreme Court in the case of Checkmate Services P. Ltd. vs. Commissioner Of Income Tax-I, where it was held that employers must deposit employees’ contributions towards ESI and PF on or before the due date to avail deductions. The Supreme Court distinguished between the employer’s liability and the employee’s contribution, deeming the latter as income held in trust by the employer, which must be deposited timely.
The Hon’ble Apex Court observed:
In the opinion of this Court, the reasoning in the impugned judgment that the non-obstante clause would not in any manner dilute or override the employer’s obligation to deposit the amounts retained by it or deducted by it from the employee’s income, unless the condition that it is deposited on or before the due date, is correct and justified…
As the issue of the late payment of employees’ contributions towards PF has been ruled against the assessee by the Hon’ble Supreme Court in the case of Checkmate Services P. Ltd. vs. Commissioner Of Income Tax-I, the appeal of the assessee on this ground was dismissed.
The appeal by Barmalt Malting (India) Pvt. Ltd was dismissed based on the Supreme Court’s ruling. The tribunal upheld the disallowance of deductions for the late payment of ESI and PF contributions.
The tribunal’s order was pronounced in the open court on February 14, 2023, by Judicial Member Sh. C. M. Garg and Accountant Member Dr. B. R. R. Kumar.
Members:
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Barmalt Malting (India) Pvt. Ltd vs. DCIT CPC – 2017-18 – Late Payment of ESI and PF
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