VINOD KUMAR BHATI,EAST DELHI vs. INCOME TAX OFFICER, WARD 58(1), DELHI, VIKAS BHAWAN,DELHI

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ITA 2120/DEL/2026Status: DisposedITAT Delhi06 July 2026AY 2017-183 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal allowed the assessee's appeal, accepting the assessee's claim regarding the employer's contribution to ESI/PF. It also deleted the disallowances made under Section 40(a)(ia) and the ad hoc award disallowance.

What were the facts?

The assessee appealed against the disallowance of employer's contribution to ESI/PF, a disallowance under Section 40(a)(ia), and a 20% disallowance of an award amount. The lower authorities disallowed the employer's contribution based on a calculation of net wages at 27%.

What were the issues?

Whether the employer's contribution to ESI/PF was correctly disallowed and whether the disallowances under Section 40(a)(ia) and for the award amount were justified.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 192

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI

Before: Sh. Satbeer Singh Godara

For Appellant: Adv. (VC), Adv. Sh. Shivam Jain, Adv. (VC)
Hearing: 09.04.2026Pronounced: 09.04.2026

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘SMC’, NEW DELHI Before Sh. Satbeer Singh Godara, Judicial Member ITA No. 2120/Del/2026 Assessment Year: 2017-18 Vinod Kumar Bhati Vs Income Tax Officer, 218, 2nd Floor, Chanakya Complex, Ward 58(1), B-10, Subash Chowk, Laxmi Nagar, Vikas Bhawan, East Delhi- 110092 Delhi- 110002 (APPELLANT) (RESPONDENT) PAN No. AEWPB2084F Assessee by: Sh. Nitin Kumar, Adv. (VC) Sh. Rajiv Kumar, Adv. Sh. Shivam Jain, Adv. (VC) Sh. Dushyent Nayak, Adv. Revenue by : Sh. Ravi Kant Chaudhary, Sr. DR Date of Hearing: 09.04.2026 Date of Pronouncement: 09.04.2026 ORDER This assessee’s appeal for Assessment Year 2017-18 arises against the Commissioner of Income Tax/National Faceless Appeal Centre (for short, ‘CIT(A)/NFAC’) DIN & order No. ITBA/NFAC/S/250/2025-26/1085346561(1) dated 30.01.2026, involving proceedings u/s 143 of the Income Tax Act, 1961; hereinafter referred to as, “the Act”.

2.

Heard both the parties at length. Case file perused.

3.

The assessee/appellant herein, inter-alia, raises his three substantive grounds i.e., disallowance of the alleged excess employer contribution of ESI/PF sum of Rs. 4,54,423/- , that made u/s 40(a)(ia) of the Act amounting to Rs. 1,04,41,058/-

2 and 20% of the award amount to the tune of Rs. 83,370/-; respectively in both the learned lower proceedings.

4.

Coming to the first and foremost issue herein, the Revenue’ case all along is that both the Assessing Officer as well as the CIT(A) have invoked Rule 87 of the Income Tax Rules stipulating such a deduction of employer’s contribution to 27% of the salary as reduced by his share; as the case may be. It is in this factual backdrop that the learned CIT(A)/NFAC observes in para 3.3.2 that the Assessing Officer had adopted the figure of Net Wages at Rs. 1,71,71,868/-; computed @ 27%, coming to Rs. 46,36,404/- as against the assessee’s deduction claim of Rs. 50,90,827/- resulting in the impugned disallowance.

5.

The assessee invites the tribunal’s attention to page 155 of the paperbook that the aforesaid sum of Rs. 1,99,11,589/- represents the “basic” wages than the employers contribution which has gone ‘unrebutted’ from the Revenue side. I accordingly accept the asseessee’s instant first and foremost substantive ground in very terms.

6.

Next comes the aforesaid twin latter issues of section 40(a)(ia) and an ad hoc award disallowance @ 20% (supra). The Revenue could hardly dispute that he had filed his additional

3 evidence in the lower appellate proceedings under Rule 46A of the Income Tax Rules that not only all of his employees/labour force are very well under the threshold limit u/s 192 of the Act but also there is no cogent reason given in rejecting the award claim @ 20%; respectively. Deleted in very terms therefore. No other ground or argument has been pressed before the tribunal.

7.

This assessee’s appeal is allowed. Order Pronounced in the Open Court on 09.04.2026.

Sd/- (Satbeer Singh Godara) Judicial Member Dated: 06.07.2026 *Pooja Mittal, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR

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