Case Number: ITA 1790/DEL/2021
Appellant: Skypack India Pvt. Ltd., Faridabad
Respondent: Circle-2(1), Faridabad
Assessment Year: 2018-19
Case Filed on: 2021-11-29
Order Type: Final Tribunal Order
Date of Order: 2022-04-25
Pronounced on: 2022-04-25
The case of Skypack India Pvt. Ltd. vs. Circle-2(1), Faridabad involved the issue of delayed deposit of employee contributions to Provident Fund (PF) and Employees State Insurance (ESI) for the assessment year 2018-19. The appellant, Skypack India Pvt. Ltd., challenged the addition made by the Assessing Officer (AO) under Section 36(1)(va) of the Income Tax Act, 1961, on the grounds of delayed deposit of these contributions.
Skypack India Pvt. Ltd. raised several grounds in its appeal, including:
The appellant contended that although there was a delay in depositing the PF/ESI contributions, all amounts were deposited before the filing of the return of income. They relied on the decision in Azamgarh Steel & Power vs. CPC (ITA No. 1626/Del/2020) and CIT vs. AIMIL Ltd. (188 Taxman 265), which support that no disallowance should be made if the contributions are deposited before the filing of the income tax return.
The Departmental Representative (DR) supported the lower authorities’ orders and cited the Delhi Tribunal’s decision in Vedvan Consultants Pvt. Ltd. vs DCIT (ITA No. 1312/Del/2020). The DR also argued that the amendment brought by the Finance Act 2021 should apply to this case, clarifying that the provisions of Section 43B do not apply to sums received from employees.
The Tribunal noted that the issue had already been settled in favor of the assessee by various judicial pronouncements, including the Delhi High Court’s decision in PCIT vs. Pro Interactive Service (India) Pvt. Ltd. (ITA No. 983/2018). The Tribunal held that the legislative intent was to ensure the amount paid is allowed as expenditure only when payment is made, not to treat belated payment of PF/ESI as deemed income.
Regarding the Finance Act 2021 amendment, the Tribunal observed that the notes on clauses to the Finance Bill 2021 state the amendment applies from 01.04.2021 and is relevant for the assessment year 2021-22 onwards. Thus, it does not apply to the assessment year under consideration.
Based on these findings, the Tribunal ruled in favor of Skypack India Pvt. Ltd., allowing the appeal and dismissing the Revenue’s appeal. The Tribunal emphasized that no disallowance should be made if the contributions are deposited before the filing of the return of income.
Order pronounced in the open court on 25.04.2022
Per Bench:
Kul Bharat
Judicial Member
Anil Chaturvedi
Accountant Member
Skypack India Pvt. Ltd. vs. Circle-2(1), Faridabad: Dispute Over Delayed PF and ESI Contributions
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