DCIT vs. JCB India Limited, ITA No. 3430/DEL/2024
Delhi Bench of the Income Tax Appellate Tribunal (ITAT) in ITA No. 3430/Del/2024 has dismissed the Revenue’s appeal concerning the disallowance of a deduction claimed for employee contributions towards ESI and EPF under Section 36(1)(va) of the Income Tax Act, 1961.
Background:
JCB India Ltd. filed its return for AY 2023–24 declaring income exceeding ₹21,700 crore. The Central Processing Centre (CPC), Bengaluru, made a disallowance of ₹3.25 crore on the grounds of a one-day delay in depositing the employee contributions to the statutory ESI and PF funds.
However, the due date for the deposit fell on a Sunday, and the payment was made on the next working day, i.e., Monday.
Key Legal Issue:
Whether a one-day delay in deposit of ESI/EPF contributions, where the due date falls on a holiday, would render the expense inadmissible under Section 36(1)(va)?
CIT(A) & ITAT Observations:
The CIT(Appeals) deleted the disallowance relying on the General Clauses Act, 1897 (Section 10) and Limitation Act, 1963 (Section 4) — both of which allow statutory compliance on the next working day if the due date is a public holiday.
This was further reinforced by the Delhi High Court judgment in the case of PCIT v. Pepsico India Holding (P) Ltd. [2023] 156 taxmann.com 25, where a similar one-day delay (due to a national holiday) was upheld in favour of the assessee.
The ITAT noted:
The DR failed to cite any contrary ruling, and the Checkmate Services case relied upon by Revenue is factually distinguishable — the delay there was not due to a holiday.
Conclusion:
The ITAT affirmed the CIT(A)’s decision, holding that statutory contributions made on the next working day due to a public holiday cannot be disallowed merely on technical grounds.
This decision brings clarity and relief to employers, especially in cases where compliance is delayed due to unavoidable public holidays.
Takeaway:
If your ESI or EPF contribution deadline falls on a Sunday or national holiday, a deposit made on the next working day will not attract disallowance, as per current judicial precedence in Delhi jurisdiction.