The Income Tax Appellate Tribunal (ITAT) in Delhi addressed a pivotal case, ITA 1729/DEL/2021, between Kamal Singh Sehrawat and the Income Tax Officer, Ward-2(3), Gurgaon, concerning the tax treatment of employee contributions to provident funds and other welfare schemes.
This case revolves around the assessment year 2018-19, where the dispute centers on the disallowance of delayed employee contributions to provident funds. The primary legal question was whether these contributions, if delayed, should impact the tax liability of the employee and the employer’s responsibilities under the Income Tax Act.
The appellant argued that despite delays, contributions made before the tax filing deadline should not be disallowed under Section 36(1)(va) of the Income Tax Act. The IT Office maintained that late payments could not be accepted for tax relief purposes, emphasizing strict adherence to statutory deadlines.
The Tribunal, led by Judicial Member Sh. Saktijit Dey and Accountant Member Dr. B. R. R. Kumar, decided in favor of the taxpayer. They referenced similar cases and judicial precedents which supported the view that if contributions are made before the tax return filing deadline, they should be considered for tax relief.
The judgment has significant implications for both employees and employers concerning the management of employee contributions to welfare funds. It underscores the importance of understanding the nuances of tax laws regarding employee benefits.
The decision in ITA 1729/DEL/2021 provides crucial insights into the handling of employee contributions to provident and other welfare funds under the Income Tax Act, reinforcing the need for timely compliance while recognizing the practicalities of business operations.
Assessing Employee Contributions to Provident Funds: ITA 1729/DEL/2021
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