VE Commercial Vehicles Limited vs JCIT, Special Range 9, New Delhi

In a landmark judgment delivered by the Income Tax Appellate Tribunal, Delhi Bench ‘G’, the case between VE Commercial Vehicles Limited, an esteemed commercial vehicle manufacturer based in New Delhi, and the JCIT, Special Range 9, New Delhi was decisively settled. The tribunal bench comprising Shri Kul Bharat, Judicial Member, and Shri Pradip Kumar Kedia, Accountant Member, delivered the judgment on 19th May 2022 for the assessment year 2017-18 under case number ITA 773/DEL/2022.

The crux of the appeal lay in the disallowance of employee’s contribution to Provident Fund (PF) and Employee State Insurance (ESI) due to delays in deposits as per the respective Acts. The appellant, VE Commercial Vehicles Limited, contested that the appellate authority erred in not granting relief despite the late deposit of PF/ESI contributions before the due date of filing the return of income. The matter involved critical interpretation of sections 36(1)(va) and 43B of the Income Tax Act, 1961, concerning the deposit timings of employee contributions towards PF and ESI.

The tribunal, after a detailed examination of the submissions and relevant legal precedents, concluded in favor of the appellant. It was noted that various judicial pronouncements, including the notable judgments of Azamgarh Steel & Power vs. CPC and CIT vs. AIMIL Ltd., have settled the issue by allowing such contributions if deposited before the filing of income tax return. The bench further highlighted that the amendment brought by Finance Act 2021, clarifying the provisions of section 43B, is applicable prospectively from the assessment year 2021-22 and thus does not affect the assessment year in question.

In conclusion, the bench allowed the appeal of VE Commercial Vehicles Limited, setting aside the disallowance made by the lower authorities. This judgment reiterates the tribunal’s position on allowing delayed deposits of employee contributions towards PF and ESI, provided they are deposited before the due date of filing the income tax return. The decision marks a significant precedent, providing clarity on the application of related income tax provisions and reinforcing the principles of natural justice in tax assessments.

VE Commercial Vehicles Limited vs JCIT, Special Range 9, New Delhi