RAM DAYAL BANSAL (PROPRIETOR BNASAL ASSOCIATES),DELHI vs. ASSESSING OFFICER-ACIT CIRCLE 61(1), DELHI, NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’, NEW DELHI BEFORE SH. SUDHIR KUMAR, JUDICIAL MEMBER AND SH. NAVEEN CHANDRA, ACCOUNTANT MEMBER ITA No. 1336/Del/2026 (Assessment Year : 2018-19) Ram Dayal Bansal Vs. Assessing Officer-ACIT (Proprietor Bansal Circle – 61(1) Associates) Delhi 1497 and 1497A, Sector – B Pocket-1, Vasant Kunj, New Delhi – 110 070 PAN No. AEKPB 0260 P (APPELLANT) (RESPONDENT) Assessee by Shri Suraj Bhan Nain, Adv. Revenue by Shri Sangeet Bansal, Sr. D.R. Date of hearing: 02.06.2026 Date of Pronouncement: 15.06.2026

ORDER PER NAVEEN CHANDRA, ACCOUNTANT MEMBER : This captioned appeal has been filed by the learned Commissioner of Income Tax (Appeals)/NFAC, Delhi (hereinafter referred as ‘CIT(A)’) order dated 06.06.2025 arising from the assessment order u/s 143(3) of the Income Tax Act, 1961 (hereinafter, mentioned as ‘the Act’) dated 11.03.2021 passed by the NFAC, Delhi

ITA No. 1336/DEL/2026 [A.Y 2018-19] Ram Dayal Bansal (Proprietor Bansal Associates) vs. Assessing Officer - ACIT (hereinafter referred as the ‘AO’) for the Assessment Year (A.Y.) 2018- 19. 2. Grounds of appeal filed by the assessee are as under : 1. The Ld. CIT(A) has erred on facts and in law in confirming the disallowance made by the AO on account of Sales Tax/VAT etc. debited to P & L account and on account of late payment of employees' contribution to EPF etc. even though the case was selected for scrutiny on the limited issue of 'contract receipt or fees'. 2. The CIT(A) has erred on facts and in law in confirming the disallowance made by the AO on account of Sales Tax/VAT etc. debited to P & L account of Rs. 44,90,343/- on the ground that the sale tax/VAT etc. is not credited to P & L account on the ground that the proof of its payment is not filed, in gross violation of principle of natural justice, even though the appellant had filed sufficient evidence of its payment and the Ld. AO never asked to file further evidence if required. 3. The Ld. CIT(A) has erred on facts and in law in confirming the disallowance made by the AO on account of late payment of employee's contribution to EPF and ESI amounting to Rs. 97,915/- in view of provisions of section 36(1)(va) of the I.T. Act ignoring the biding decision of Hon'ble Jurisdictional High Court in the case of AIMIL Ltd. and also misinterpreting the decision of Hon'ble Supreme Court in the case of Rajasthan State Beverages Corporation Ltd. cited by the appellant even though the Hon'ble Supreme Court had laid down law on this issue. 4. The Ld. CIT(A) has erred on facts and law in not giving any findings on the issue of initiation of penalty proceedings u/s 270A of the Income Tax Act, 1961. 5. The Ld. CIT(A) has erred on facts and law in not giving any findings on the issue of levying further tax on income u/s 115BBE of the Income Tax Act, 1961. 6. The appellant craves for liberty to add fresh ground(s) of appeal and also to amend, alter, modify any of the ground(s) of appeal.”

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ITA No. 1336/DEL/2026 [A.Y 2018-19] Ram Dayal Bansal (Proprietor Bansal Associates) vs. Assessing Officer - ACIT 4. Brief facts of the case are that the assessee, Sh. Ram Dayal Bansal is a Proprietor of M/s Bansal Associates, engaged in the business as civil contractor mainly for government departments. The Assessee filed his return of income for A.Y. 2018-19 declaring total income at Rs. 1,7081,700/- on 16.08.2018. The case was selected for scrutiny by issuing notice u/s 143(2) of the Act dated 23.09.2019 on the issue "Contract Receipts of Fees". The Assessing Officer completed the assessment u/s 143(3) r.w.s. 143(3A)/143(3B) of the Act vide order dated 11.03.2021 determining total income at Rs. 2,16,69,958/- by making following disallowances : (i) sales tax of Rs. 44,90,343/- debited in P & L A/c, and (ii) Rs. 97,915/- out of employees' contribution towards PF and ESIC under section 36(1)(va) of the Act. 5. The Sales tax debited has been disallowed mainly on the ground that turnover has been declared net of indirect taxes and no supportive evidence for payment of sale tax was given. Employees' Contributions towards PF & EISC were disallowed being paid after due date defined u/s 36(1)(va) of the Act. Aggrieved, assessee was in appeal before the learned Ld. CIT(A) who in his order u/s 250 of the Act dated 06.06.2025 confirmed the above disallowances made in the impugned assessment order. Aggrieved, assessee is now in appeal before us.

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ITA No. 1336/DEL/2026 [A.Y 2018-19] Ram Dayal Bansal (Proprietor Bansal Associates) vs. Assessing Officer - ACIT 6. At the outset, learned Counsel for the assessee contested the said disallowance and submitted as under: A. Disallowance of sales tax of Rs. 44,90,343/- debited to Profit and Loss Account: The assessee debited sales tax of Rs.44,90,343/- in Profit & Loss Account consists of following items: (i) Work Contract Tax (WCT) for April to June 2017 : Rs. 33,85,666 (ii) VAT Refunds-not received : Rs. 11,04,677 Total : Rs. 44,90,343 (i) WCT of Rs. 33,85,666/-: It is submitted that Works Contract Tax (WCT) is a tax levied on the transfer of property in goods involved in the execution of a works contract. Prior to the introduction of the Goods and Services Tax (GST) on 01.07.2017, works contracts were subject to a dual levy - VAT (on the goods component) under respective State VAT Acts, and Service Tax (on the service component) under the Finance Act, 1994. Since works contracts inherently involve both a supply of goods and a provision of services, determining the exact value of goods transferred was complex and often disputed. To ease this compliance burden, Department of Trade & Taxes, Govt. of NCT of Delhi under the Delhi Value Added Tax Act, 2004 introduced a Composition Scheme, enabling contractors to pay tax at a flat concessional rate of 3% on gross contract receipts, without the need to maintain detailed item-wise accounts of goods used. The salient features of the Scheme are summarized as under:  Tax is payable by the Contractor, not collected from the Contractee : Under the Composition Scheme, the contractor opts to pay tax at 3% of the gross contract value as his own composition tax. This is not an amount charged over and above the contract price and collected from the contractee.  The contractor under Composition Scheme cannot claim Input Tax Credit (ITC) on goods purchased for use in works contracts. This was the principal trade-off of opting for the Scheme.  Contractees (especially Government departments and PSUs) were required to deduct WCT-TDS @ 2% at source from payments made to contractors, which was adjustable against the composition tax liability.

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ITA No. 1336/DEL/2026 [A.Y 2018-19] Ram Dayal Bansal (Proprietor Bansal Associates) vs. Assessing Officer - ACIT  The contractor was entitled to obtain Form DVAT- 43 from the contractee as evidence of TDS deduction, which was then adjusted against the gross composition tax liability of 3% of the gross contract value.

The Delhi VAT Act, 2004 and the Works Contract Composition Scheme there under ceased to operate with effect from 1 July 2017 upon the nationwide implementation of the Goods and Services Tax (GST) under the CGST Act, 2017 and the DGST Act, 2017. In the present case, during F.Y. 2017-18, the appellant executed works contracts for Government Departments. The total turnover of the appellant during the year was as under: Particulars Amount (Rs.) Sale WCT @3% 11,28,55,523 Sales Local @12% 2,87,20,298 Sales Local @18% 1,19,19,255 Sales @18% 7,62,87,377 Sales @12% 23,51,20,296 Total 46,49,02,749

During the year relevant to A.Y. 2018-19 (F.Y. 2017-18), only the First Quarter (01.04.2017 to 30.06.2017) fell within the VAT regime. GST came into force with effect from 01.07.2017, replacing the VAT/WCT regime. Out of the above, turnover of Rs. 11,28,55,523/- pertained to works contracts executed during April to June 2017, i.e., prior to implementation of GST. The gross Works Contract Tax under Delhi VAT @ 3% on such turnover worked out to Rs. 33,85,666/-, This is a statutory tax liability arising from the business of contracting. Out of this, Rs. 22,01,916/- was deducted by the payer Government departments as TDS on VAT and Rs. 11,87,205/- was paid directly by the appellant through a challan dated 11.08.2017. Thus, the said amounts have actually been paid to the Government exchequer. The WCT/VAT paid by the appellant is a statutory levy incurred wholly and exclusively during the course of carrying on his business of civil contracting. Accordingly, WCT liability at 3% amounted to Rs. 33,85,666/- debited to the Profit & Loss Account and duly paid was an allowable deduction as expenditure incurred wholly and exclusively for the purpose of business. Copies of VAT returns and relevant challans were furnished before the lower authorities. It is humbly submitted that the disallowance has been made primarily on the ground that turnover was shown net of indirect taxes and that supporting evidence was allegedly not furnished. It is respectfully submitted that these findings are factually incorrect and

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ITA No. 1336/DEL/2026 [A.Y 2018-19] Ram Dayal Bansal (Proprietor Bansal Associates) vs. Assessing Officer - ACIT contrary to material placed on record. As mentioned above, under the Composition Scheme, Works Contract Tax is payable by the Contractor, not collected from the Contractee. Hence, it is not charged in the invoice for contact revenue and could not be included in the turnover. Further, the appellant has furnished VAT returns and relevant challans before the lower authorities evidencing the payment of WCT of Rs. 33,85,666/-. The WCT paid under the Composition Scheme constituted a statutory business expenditure incurred wholly and exclusively for the purposes of business and was, therefore, allowable under section 37(1) of the Act. In view of the above, it is respectfully submitted that VAT(WCT) of Rs. 33,85,666/-paid as per Composition Scheme by the assessee on the gross contract receipt was an allowable deduction u/s 37 of the Income Tax act 1961 and, therefore, may kindly be allowed. Thus, the disallowance of Rs. 33,85,666/- deserves to be deleted. (ii) VAT Refunds- Rs. 11,04,677/-: It submitted that there were claims of refunds under VAT for earlier years which were pending to be received and were reflected in the Balance Sheets on asset side under the head- 'Advance to Suppliers & Others'. As per Balance Sheet as on 31.03.2017 (F.Y. 2016-17), under the head 'Advance to Suppliers & Others' the amount of Rs. 90,33,299/- consisted of the following items: ADVANCE TO SUPPLIERS Amount (Rs.) & OTHERS: VAT Refundable / Receivable 1075045.00 Advance paid against 7958254.00 Creditors Total 9033299.00

The position of VAT Refund claims pending from earlier years and CST/VAT Input credit available at the end of F.Y. 2017-18 was as under: Particulars F.Y. Amount (Rs.) Haryana VAT Refundable 2017-18 18,963 VAT Refundable 2016-17 17,363 VAT Refundable 2012-13 50,428 VAT Refundable 2015-16 38,991 VAT Refundable C/F 2014-15 43,727 VAT Refundable 1st Quarter 2013-14 5,24,092 VAT Refundable 2nd Quarter 2013-14 58,661 VAT Refundable 4th Quarter 2013-14 75,072 VAT Refundable 2nd Quarter 2014-15 1,65,030

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ITA No. 1336/DEL/2026 [A.Y 2018-19] Ram Dayal Bansal (Proprietor Bansal Associates) vs. Assessing Officer - ACIT VAT Refundable 3rd Quarter 2014-15 90,479 CST VAT Refundable 20,224 Input VAT 20% Rs.1652/-, 1,647 Input VAT @12.5% Rs. -4.80/- Total 11,04,677/-

The assessee has furnished copy of ledger accounts of these items before lower authorities.

Upon the introduction of GST w.e.f. 01.07.2017, the VAT regime stood superseded. The GST transitional provisions did not permit credit or set off of residual VAT TDS or pending VAT refunds from the pre-GST era. Hence, the VAT refunds claims were permanently lost to the appellant without any possibility of recovery-making them an irrecoverable business loss. Therefore, the assessee has written off these pending claims of VAT refunds and input tax credit (ITC) in the books of account and debited to Profit & Loss Account treating the same as irrecoverable. It is humbly submitted that the Ld. CIT(A)'s characterization of earlier years' VAT as "prior period expenditure" is erroneous. This reasoning ignores the established principle that a loss or write-off is recognized in the year in which the amount becomes irrecoverable. The refunds/advances from earlier years continued to be reflected as assets in the Balance Sheet in anticipation of recovery. It was only in A.Y. 2018-19-the first assessment year after the GST transition that recovery became impossible. The deduction, therefore, crystallized in A.Y. 2018-19 and is not a "prior period" item. It is respectfully submitted that the write-off of Rs. 11,04,677/-, representing irrecoverable VAT refund claims that were earlier shown as receivable assets in the balance sheet, is allowable as deduction either as a bad debt u/s 36(1)(vii) of the Act or as a business loss/expenditure u/s 37(1) of the Act. The write-off was genuine, bona fide, and incurred in course of business. Thus, the amount bonafide written off in the books of account represents a genuine loss in the business. The Hon'ble Supreme Court in the case of T.R.F. Ltd. v. Commissioner of Income-tax [2010] 190 Taxman 391 (SC) held that for deduction u/s 36(1)(vii) of the Act after 01.04.1989, it is not necessary for assessee to establish that debt, in fact, has become irrecoverable; it is enough if bad debt is written off as irrecoverable in accounts of assessee. Accordingly, the disallowance of Rs. 11,04,677/- deserves to be deleted. In view of the above, it is humbly submitted that the total amount of Rs. 44,90,343/-[Work Contract Tax (WCT) for April to June 2017 of Rs. 33,85,666 + VAT Refundsalt Claims of Rs. 11,04,677] debited as sales tax in Profit & Loss Account may kindly be

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ITA No. 1336/DEL/2026 [A.Y 2018-19] Ram Dayal Bansal (Proprietor Bansal Associates) vs. Assessing Officer - ACIT allowed as deduction and the disallowance made by the Ld. Assessing Officer may kindly be deleted. 7. On the other hand, Learned DR relied upon the order of the AO/CIT(A). 8. We have heard the rival submissions and perused the material available on record. We find that the assessee has executed the work contract for Govt. Department during the F.Y. 2017-18 relevant to A.Y. 2018-19 only in first quarter (01.04.2017 to 30.06.2017) which fell within the VAT regime since the GST came into force w.e.f. 01.07.2017 in the next quarter under the GST Scheme. We further find that it is an unrebutted fact that the Sales Tax of Rs.33,85,666/- was paid by the assessee as per composition scheme @ 3 % of the gross works contract receipt by the assessee. We find that the AO has not disputed either the payment of Sales Tax or the business purpose of the payment. We therefore, are of the considered view that the same is allowable as deduction under section 37(1) of the Act. 9. Similarly, the VAT refund of earlier years, having no hope of recovery of such refund from the government, the assessee claimed it as bad debt by debiting it in its P&L account. There is no dispute that this is not a genuine or bonafide write off in the books of account. Following the Hon'ble Supreme Court in the case of T.R.F. Ltd. v.

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ITA No. 1336/DEL/2026 [A.Y 2018-19] Ram Dayal Bansal (Proprietor Bansal Associates) vs. Assessing Officer - ACIT Commissioner of Income-tax [2010] 190 Taxman 391 (SC) which held that for deduction u/s 36(1)(vii) of the Act after 01.04.1989, it is not necessary for assessee to establish that debt, in fact, has become irrecoverable; it is enough if bad debt is written off as irrecoverable in accounts of assessee, we allow the write-off of the bad debt u/s 36(1)(vii) of the Act. Accordingly, the disallowance of Rs. 11,04,677/- is directed to be deleted. Ground No.2 is allowed. 10. The second issue is with regard to the disallowance of employees' contribution to EPF and ESI amounting to Rs. 97,915/- u/s 36(1)(va) of the I.T. Act 1961. In the course of assessment proceedings, the Ld. Assessing Officer noted from TAR that the assessee had deposited employees' contribution towards PF/ESI to the extent of Rs. 97,915/- after the due date prescribed under the respective welfare enactments but before the due date of filing return under Section 139(1) of Income Tax Act 1961. The Ld. Assessing Officer disallowed the said amount under section 2(24)(x) r.w.s. 36(1) (va) of the Act. 11. Aggrieved assessee was in appeal before the CIT(A) who sustained the disallowance by relying upon the decision of Hon'ble Supreme Court in the case of Checkmate Services P. Ltd. vs. CIT [2022] 143 taxmann.com 178 (SC). Aggrieved, assessee is now in appeal before us.

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ITA No. 1336/DEL/2026 [A.Y 2018-19] Ram Dayal Bansal (Proprietor Bansal Associates) vs. Assessing Officer - ACIT 12. At the outset, learned Counsel for the assessee argued that the Hon'ble jurisdictional Delhi High Court in the case of CIT v. AIMIL Ltd. [2010] 188 Taxman 265 (Delhi) categorically held that employees' contribution towards PF and ESI qualifies for deduction even if paid after the due date prescribed under the PF/ESI Acts, provided the payment is made before the due date of filing the return of income. The ld AR further relied on Insta Exhibitions Pvt. Ltd. v. Addl. CIT [ITA No. 6941/Del/2017, ITAT Delhi, order dated 03.08.20211, where the Hon'ble Delhi Bench of the ITAT specifically held that the amendment to section 36(1)(va) introduced by the Finance Act, 2021 is applicable only from A.Y. 2021-22 and that for earlier assessment years, the position that deposit before due date of filing of return is sufficient holds good. The ld AR submitted that similar view was expressed by the Hon'ble ITAT Delhi Bench 'B' in the case of Flying Fabrication v. Deputy Commissioner of Income-tax [2021] 133 taxmann.com 84 (Delhi - Trib.) wherein it was observed that where for assessment years 2018-19 and 2019-20, employee's contribution to ESI/PF was deposited by assessee-employer before due date of filing return under section 139(1) but after due date prescribed in amended section 36(1)(va), no disallowance could be made for said assessment years as per amendment to section 36(1)(va) brought by Finance Act,

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ITA No. 1336/DEL/2026 [A.Y 2018-19] Ram Dayal Bansal (Proprietor Bansal Associates) vs. Assessing Officer - ACIT 2021 which came into effect from 01-04-2021 as same has no retrospective applicability. 13. The ld AR then forcefully argued that after the decision of Hon'ble Supreme Court in the case of Checkmate Services P. Ltd. vs. CIT [2022] 143 taxmann.com 178 (SC), the Finance Act 2026 introduced clause (e) to Section 29(1) of the Income-tax Act, 2025, which allowed for such deduction u/s 29(1)(e) of the Act. The ld AR argued that such amendment being curative, remedial and clarificatory in nature deserves retrospective application to the assessment year under appeal also. 14. The ld AR further relied on Allied Motors (P.) Ltd. v. CIT [1997] 224 ITR 677 (SC); and CIT v. Alom Extrusions Ltd. [2009] 185 Taxman 416 (SC) 15. Lastly, the ld AR made the argument that under the provisions of Section 38 (1) of the Employees Provident Funds and Miscellaneous Provisions Act, 1952, an employer is required, before paying the employee his wages, to deduct the employee's contribution towards Provident Fund along with the employer's own contribution as fixed by the Government. It is further required that he shall within fifteen days of the close of every month, pay the same to the fund such contribution and administrative charges. In terms of this provision,

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ITA No. 1336/DEL/2026 [A.Y 2018-19] Ram Dayal Bansal (Proprietor Bansal Associates) vs. Assessing Officer - ACIT thus, after deducting the employee's contribution towards the funds, the same has to be deposited with the Government within fifteen days of the close of every month. Reference to fifteen days of the close of the month must be in relation to the month during which the payment of wages is made and corresponding liability to deduct employee's contribution to the fund arises. The expression "within fifteen days of the close of every month" therefore must be interpreted as having reference to the close of the month, in which the wages are paid with corresponding duty to deduct employee's contribution and to deposit the same in the fund. 16. In view of the above, it is submitted that the deposit of employees' contribution should be reckoned from the month in which the salary has been actually disbursed rather than the month for which the salary relates. For instance, the salary for the month of April, 2017 has been paid in the month of May 2017 and, therefore, due date for deposit of employees' contribution to PF/ESIC should be reckoned from May 2017 and consequently the due date should be recorded as 15.06.2017. Once, this methodology is adopted then there is no delay in deposit of the employees' contribution towards PF as well as ESIC. The ld AR submitted a monthwise details of employees' contribution deposited are as under:

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ITA No. 1336/DEL/2026 [A.Y 2018-19] Ram Dayal Bansal (Proprietor Bansal Associates) vs. Assessing Officer - ACIT

Monthwise detail of payment of salary, due date of deposit and date of deposit of PF & ESI Salary Month Month in which Employees' Due date Actual date Amount salary become due Contribution of payment deposited and paid Provident Fund April 2017 May 2017 12,000 15.06.2017 27.05.2017 12,000 September 2017 October 2017 18,160 15.11.2017 28.10.2017 18,160 October 2017 November 2017 17,453 15.12.2017 26.11.2017 17,453 January 2018 February 2018 19,198 15.03.2018 23.02.2017 19,198 February, 2018 March 2018 19,389 15.04.2018 22.03.2017 19,389 ESIC April 2017 May 2017 1,226 21.06.2017 27.05.2017 1,226 September 2017 October 2017 2,129 21.11.2017 25.10.2017 2,129 October 2017 November 2017 2,026 21.12.2017 26.11.2017 2,026 November 2017 December 2017 2,271 21.01.2018 27.12.2017 2,271 January 2018 February 2018 2,016 21.03.20185 07.03.2018 2,016 February 2018 March 2018 2,047 21.04.2018 22.03.2018 2,047 Total 97,915 97,915

In support of the above proposition of law, reference is made to the

following decisions:

(i) Kanoi Paper & Industries Ltd. v. ACIT [2002] 75 TTJ 448 (CAL.) (ii) Sentinel Consultants (P.) Ltd. v. ACIT [2023] 153 taxmann.com 151 (Delhi- Trib.) (iii) Dedha India Solutions P. Ltd. Vs. ITO, Ward-7(1) New Delhi in I.T.A. No.268/DEL/2023 for A. Y. 2019-20 Order dated 08.08.2023 (Delhi-Trib.)

CIT(A).

Firstly, reliance of the Hon'ble jurisdictional Delhi High Court in the

case of CIT v. AIMIL Ltd. and ITAT decisions in Insta Exhibitions Pvt.

Ltd. v. Addl. CIT and Flying Fabrication v. Deputy Commissioner of

Income-tax (supra) is no longer valid as these decisions predate the

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ITA No. 1336/DEL/2026 [A.Y 2018-19] Ram Dayal Bansal (Proprietor Bansal Associates) vs. Assessing Officer - ACIT decision of Hon'ble Supreme Court in the case of Checkmate Services P. Ltd. vs. CIT (supra). Moreover, the hon’ble Delhi High Court in the case of Woodland (Aero Club) Private Limited vs ACIT [2025] 178 taxmann.com 207 (Delhi)[08-09-2025] wherein relying on the decision of Checkmate Services P. Ltd. vs. CIT, held that for assessment year 2019-20, disallowance u/s 36(1)(va) for employee's contribution to ESI/PF that was deposited by assessee-employer after due date prescribed in PF/ESCI Acts but before due date of filing return under section 139(1), is valid. The hon’ble Delhi High Court also observed that the Supreme Court in Checkmate Services (P) Ltd. v. CIT had also considered Alom Extrusions Ltd (2009) 185 Taxman 416(SC) and distinguished the same by observing that the judgment had not considered sections 2(24)(x) and 36(1)(va), and also the separate provisions for employers' and employees' contributions under section 36(1). The hon’ble Delhi High Court also dispelled the assessee’s argument that the Assessing Officer under section 143(1) could not have passed the order dated 28-5-2020, by holding that at the time when the Assessing Officer proposed the deductions, the judgment of the Gujarat High Court in CIT v. Gujarat State Road Transport Corporation [2014] 366 ITR 170 (Gujarat) was in existence, which has been affirmed by the Supreme Court in

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ITA No. 1336/DEL/2026 [A.Y 2018-19] Ram Dayal Bansal (Proprietor Bansal Associates) vs. Assessing Officer - ACIT Checkmate Services (P) Ltd. v. CIT, hence the Assessing Officer did not err in passing the order. 19. Coming to the argument that the introduction of clause (e) to Section 29(1) of the Income-tax Act, 2025, should be considered curative, remedial and clarificatory in nature and therefore having retrospective application, we are not convinced. We find that the legislature has made the provision of section 29(1)(e) with effect from 01.04.2026 vide the Finance Act 2026 and the amendment is neither curative or clarificatory to have a retrospective application. We are of the considered view therefore, that the benefit is granted from 01.04.2026 only and if the legislature had intended to dilute the rigours of the Supreme Court decision in Checkmate Services (P) Ltd. v. CIT, it would have specifically made the amendment retrospective. We therefore hold that the provision of Section 29(1)(e) of the Income- tax Act, 2025 has prospective application and does not alter the legal position as mandated by Checkmate Services (P) Ltd. v. CIT and as available in AY 2018-19. 20. Coming to the alternate argument that the deposit of employees' contribution should be reckoned from the month in which the salary has been actually disbursed rather than the month for which the salary relates, we find that the same is misleading. The law on this subject as

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ITA No. 1336/DEL/2026 [A.Y 2018-19] Ram Dayal Bansal (Proprietor Bansal Associates) vs. Assessing Officer - ACIT available in relevant provisions of section 38(1) of the Employees Provident Funds and Miscellaneous Provisions Act, 1952, reads as under: "(1) The employer shall, before paying the member his wages in respect of any period or part of period for which contributions are payable, deduct the employee's contribution from his wages which together with his own contribution as well as an administrative charge of such percentage of the pay (basic wages, dearness allowance, retaining allowance, if any, and cash value of food concessions admissible thereon) for the time being payable to the employees other than an excluded employee, as the Central Government may fix. He shall within fifteen days of the close of every month pay the same to the fund "electronic through internet banking of the State Bank of India or any other Nationalized Bank authorized for collection" on account of contributions and administrative charge]: "Provided that the Central Provident Fund Commissioner may for reasons to be recorded in writing, allow any employer or class of employer to deposit the contributions by any other mode other than internet banking".

Reading the above provision and specially the condition “within fifteen days of the close of every month” to our mind, would mean fifteen days from the month in which the wages/salary is liable to be disbursed to the employees. For instance, the salary for the month of April, 2017 becomes due on 1st May, 2017. The assessee has to disburse the wages/salary and deduct employees’ contribution of PF/ESI in May 2017. Thereafter, within 15 days of the end of month of May, in which the deduction of PF/ESI has to take place, the employer has to deposit

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ITA No. 1336/DEL/2026 [A.Y 2018-19] Ram Dayal Bansal (Proprietor Bansal Associates) vs. Assessing Officer - ACIT the employees’ contribution of PF/ESI with the respective fund. Accordingly, therefore, the due date for deposit of employees' contribution to PF/ESIC should be reckoned 15 days from end of May 2017 and consequently the due date should be recorded as 15.05.2017 and not 15.06.2017 as suggested by the assessee. To our mind, the provision of “due date” in PF/ESI Acts works as welfare legislation for the employees which ensures timely disbursal of wages to the employees. If the interpretation of the assessee that the month in which the salary has been actually disbursed rather than the month for which the salary relates, is adopted the same will go against the employees’ welfare as in that situation, the employers would be free to delay the disbursal of salary for the month of May in any other month, for example July, deposit the employees contribution in July and claim deduction u/s 36(1)(va) of the Act with impunity. 21. We further note that the Auditor of the assessee, in their Tax Audit report in para no.20(b), recognizes our interpretation and pointed out that the assessee did not deposit the employees’ contribution towards PF/ESI on or before the due date as prescribed in the respective Acts. The Auditor has correctly pointed out that for example, for the deposit of employees’ contribution towards PF/ESI for the month of April, 2017, the due date was 15.05.2017 and the actual

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ITA No. 1336/DEL/2026 [A.Y 2018-19] Ram Dayal Bansal (Proprietor Bansal Associates) vs. Assessing Officer - ACIT payment was made on 27.05.2017, therefore beyond the due date. In view of the discussion as above, we therefore hold that the assessee has deposited the employees’ contribution towards PF/ESI into the accounts of respective funds, beyond the prescribed due dates and is disallowable u/s 36(1)(va) r.w section 2(24)(x) of the Act. Ground No.2 is dismissed. 22. In the result, appeal filed by the assessee in ITA No.1336/Del/2026 is partly allowed. Order pronounced in the open court on 15.06.2026

Sd/- Sd/- (SUDHIR KUMAR) (NAVEEN CHANDRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Date:- 15.06.2026 Priti Yadav, Sr. Ps* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI

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