Judgment Summary for ITA No. 898/DEL/2022: VGR Engineering Services Pvt. Ltd. vs DCIT

Income Tax Appellate Tribunal Judgment Overview

Case Reference: ITA No. 898/DEL/2022

Appellant: VGR Engineering Services Private Limited, Haryana

Respondent: DCIT, Circle-26(2), Delhi

Assessment Year: 2019-20

Judgment Summary

This case addresses the appeals filed against the orders of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), for various assessment years including 2019-20. The primary issue under consideration was the disallowance made under Section 36(1)(va) of the Income Tax Act, 1961, in respect of employees’ contribution to ESI and PF deposited after due date as per relevant acts but before the due date for filing return of income under Section 139(1) of the Act.

The Appellate Tribunal reviewed submissions and relevant legal precedents. The contention revolved around the application of amendments brought in by the Finance Act, 2021, relating to deductions for employees’ contribution to welfare funds. Despite arguments presented regarding the retrospective applicability of the amendments clarifying certain provisions of the Income Tax Act, the Tribunal observed that such amendments, declared clarificatory in nature, should not alter or change the law as previously stood.

The Tribunal noted that this issue had been decisively covered by the jurisdictional High Court and the Supreme Court in similar cases, emphasizing the allowance of such contributions if deposited before the filing of the return. Therefore, aligning with the principles upheld in notable judgments, the Tribunal directed the Assessing Officer to delete the disallowance of employees’ contributions to EPF and ESI, provided these were remitted before the due date for filing of income tax returns.

The Tribunal’s verdict facilitated a favorable outcome for the assessees, granting relief concerning the contentious disallowances and reinforcing the interpretation of relevant legislative amendments alongside established legal precedents.

Conclusion

The appeal of VGR Engineering Services Pvt. Ltd. was thus allowed, setting a significant precedent on the treatment of employees’ contributions to welfare funds regarding their deductions under the Income Tax Act.

Judgment Summary for ITA No. 898/DEL/2022: VGR Engineering Services Pvt. Ltd. vs DCIT