Shamsons Polymers P. Ltd. vs. Deputy Commissioner of Income Tax, New Delhi – ITA No. 991/DEL/2022

Income Tax Appellate Tribunal – Delhi Bench ‘G’

Case No: ITA 991/DEL/2022

Between:

Shamsons Polymers Private Limited, Appellant
and
Deputy Commissioner of Income Tax, Respondent

Judges:

CHALLA NAGENDRA PRASAD, Judicial Member
And
PRADIP KUMAR KEDIA, Accountant Member

Assessment Year:

2019-20

Final Judgment:

Allowed

The Income Tax Appellate Tribunal heard the appeals involving several assessees against orders passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, pertaining to the disallowance made under Section 36(1)(va) of the Income Tax Act, 1961. This section deals with employees’ contributions to ESI and PF deposited after the due dates under the relevant Acts but before the due date for filing the return of income under Section 139(1).

The Tribunal allowed the appeals based on the premise that when computing for the return of income under Section 143(1) of the Act, no disallowance towards contribution to employees’ PF and ESI is warranted if it is highly debatable. Furthermore, the issue was found to be covered by the jurisdictional High Court’s decision in the case of CIT Vs. AIMIL Ltd.

The Tribunal noted that amendments made by the Finance Act, 2021 to Sections 36 and 43B of the Act are to have effect from April 1, 2021, and thus, do not apply to the previous assessment years. It was held that if the assessee deposited the said contributions before the due date for filing of return under the Income Tax Act, no disallowance should be called for.

This judgment marks a significant clarification on the treatment of late deposits of employees’ contributions towards welfare funds like ESI and PF concerning the deductions allowable under the Income Tax Act.

Shamsons Polymers P. Ltd. vs. Deputy Commissioner of Income Tax, New Delhi – ITA No. 991/DEL/2022