The case of S R Group vs. ITO, Ward-4, Rohtak, adjudicated under ITA No. 1749/DEL/2021, addresses the disallowance of Rs. 17,01,981 under Section 36(1)(va) of the Income Tax Act, concerning the late deposit of employees’ contributions to ESI and PF.
This appeal was filed by S R Group against the decision of the Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre, which sustained the disallowance made by the CPC, Bangalore during the processing of the return under Section 143(1).
The primary legal issue revolved around whether the late deposit of employees’ contributions to statutory funds, albeit before the due date for filing the income tax return, should result in a disallowance under Income Tax Law. The tribunal considered various precedents and statutory amendments, ultimately deciding in favor of the assessee based on the judicial principle that allows such contributions if made before the filing of the return.
The tribunal’s decision underscores the necessity of adhering to statutory deadlines for depositing employees’ contributions to avoid penalties. However, it also reinforces that compliance before the tax filing deadline is crucial for the deductibility of these contributions. This judgment is particularly significant for employers and HR professionals in understanding the nuances of payroll management in compliance with tax laws.
The case of S R Group vs. ITO brings to light the challenges and legal considerations surrounding the timing of employee contributions to statutory funds. The tribunal’s decision provides clarity and guidance on this matter, aligning with previous rulings to ensure fairness and adherence to legislative intent.
Legal Analysis of ITA 1749/DEL/2021: S R Group vs ITO, Ward-4, Rohtak
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