Date of Order: 29th August 2023
Appellant: Tina Kalra, Faridabad
Respondent: ITO, Ward-45(1), New Delhi
This legal analysis discusses the appeal filed by Tina Kalra against the decision made by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi. The primary issue at stake in this case is the late deposit of employees’ contributions towards EPF and ESI for the assessment year 2020-21, which was initially disallowed by the Assessing Officer.
The appellant argued that the contribution was allowable under the provisions of the Income Tax Act, 1961, citing the landmark case of CIT Vs. AIMIL Ltd. [2010] 321 ITR 508, which supports the position that such contributions, if delayed, should still be allowed if substantive compliance is shown. However, this was countered by the recent Supreme Court judgment in Checkmate Services P. Ltd. vs. CIT, which solidified the stance that contributions made post the due date cannot be allowed as deductions.
The Tribunal, led by Judicial Member Kul Bharat and Accountant Member Narendra Kumar Billaiya, after considering the submissions and perusing the relevant materials, upheld the decision of the lower authorities. They emphasized that the non-obstante clause of Section 43B of the Income Tax Act, intended to ensure timely payments to statutory funds, must be adhered to strictly. As such, the appeal was dismissed, reaffirming the need for timely deposit of employees’ contributions to fund accounts as a precondition for tax deductions.
The detailed judgment illustrates the evolving jurisprudence regarding the timing of payments and its implications on tax liabilities and deductions, marking a significant precedent for similar future disputes.
The Tribunal’s decision in this case serves as a stern reminder of the strict interpretations employed by the judiciary in matters of statutory deductions related to employee contributions. The decision underscores the critical nature of adhering to statutory timelines for depositing such contributions, reflecting a broader trend towards ensuring compliance and fiscal discipline among taxpayers.
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