Case Number: ITA 1485/DEL/2021
Appellant: Globe Detective Agency (P) Ltd., New Delhi
Respondent: ACIT, Circle-10(1), Bengaluru (Karnataka)
Assessment Year: 2017-2018
Result: 2017-2018
Case Filed on: 2021-10-21
Order Type: Final Tribunal Order
Date of Order: 2022-02-28
Pronounced on: 2022-02-28
This case involves the appeal filed by Globe Detective Agency (P) Ltd. against the ACIT, Circle-10(1), Bengaluru, concerning the allowability of employee contributions to the Employees’ State Insurance (ESI) and Provident Fund (PF) under Section 36(1)(va) of the Income Tax Act, 1961. The primary issue was whether the contributions made beyond the due dates prescribed under the respective Acts, but before the due date of filing the income tax return under Section 139(1), could be allowed as deductions.
The appellant, Globe Detective Agency (P) Ltd., filed its return for the assessment year 2017-2018. During the assessment proceedings, the Assessing Officer (AO) disallowed the deductions for contributions made towards ESI and PF, citing that these were deposited beyond the due dates prescribed under the respective Acts. However, the appellant contended that these contributions were made before the due date of filing the income tax return under Section 139(1) and hence should be allowed as deductions.
The Income Tax Appellate Tribunal (ITAT) examined the amendments introduced by the Finance Act, 2021, the relevant provisions of the Income Tax Act, and various judicial precedents.
The ITAT considered various judicial precedents from different High Courts and the Supreme Court, including:
The ITAT ruled in favor of the appellant, Globe Detective Agency (P) Ltd., holding that the contributions to ESI and PF, if deposited before the due date of filing the income tax return under Section 139(1), should be allowed as deductions under Section 36(1)(va). The Tribunal emphasized the intent of the legislation to ensure that contributions are made timely and not to penalize delays when the amounts are eventually deposited before the due date for filing the return.
The appeal of the assessee was allowed, and the appeal of the Revenue was dismissed. The Tribunal concluded that no disallowance is called for belated payment of the employee’s contribution to the respective ESI and PF fund in cases where the amounts were deposited before the due date of filing the Income Tax Return.
Order Pronounced in the Open Court on 28/02/2022.
Sd/- (Saktijit Dey, Judicial Member)
Sd/- (Dr. B. R. R. Kumar, Accountant Member)
Globe Detective Agency vs. ACIT: Allowability of ESI and EPF Contributions under Section 36(1)(va)
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