Late ESI Contribution Deposited Before ITR Due Date: ITAT Upholds Deletion of Disallowance

This article highlights an ITAT ruling where delayed deposit of employees’ ESI contributions was made before the due date of filing the income tax return, leading to deletion of disallowance. The Tribunal followed recent Supreme Court and High Court precedents that differentiate between employer and employee contributions and prioritize actual deposit over timing. It emphasized that if payment is made before ITR filing, it should be allowed as deduction. The judgment provides clarity on treatment of statutory payments under Section 36(1)(va) and Section 43B, ensuring relief for employers who comply before the tax filing deadline. The article underscores how judicial interpretations are evolving to favor genuine compliance over technical disallowances, promoting fairness in income tax and labour law integration.