This article delves into the intricacies of the Income Tax Appellate Tribunal case number ITA 1722/DEL/2021, involving Compurx Infotech Pvt Ltd, Delhi, and the Assistant Director of Income Tax, CPC, Bengaluru. The case pertains to the assessment year 2017-18 and revolves around critical issues concerning the taxation policies and the interpretation of statutory provisions regarding employee contributions to provident funds and ESI.
The dispute centers on the late deposit of employee contributions to Provident Fund (PF) and Employee State Insurance (ESI) which led to a series of legal challenges. The primary contention was whether the late payment of these contributions could be claimed as deductions by the employer under the Income Tax Act, specifically sections 36(1)(va) and 43B.
The case was heard by a bench comprising Sh. Saktijit Dey, Judicial Member, and Dr. B. R. R. Kumar, Accountant Member. The tribunal’s decision focused on the interpretation of related laws and the amendments made by the Finance Act, 2021 concerning such deductions.
The tribunal ruled that the employee contributions paid by the employer, if deposited before the due date of filing the return, are allowable as deductions. This decision was influenced by recent amendments and clarifications provided in the Finance Act, 2021, which clearly distinguished between employer’s and employee’s contributions for tax deduction purposes under the Income Tax Act.
The judgment has significant implications for employers and employees concerning the compliance with provident fund and ESI contributions. It clarifies the legal standing on deductions pertaining to late payments of employee contributions, potentially affecting numerous similar cases and compliance practices across the country.
The ITA 1722/DEL/2021 case between Compurx Infotech Pvt Ltd and ADIT, CPC, Bengaluru sets a precedent in the treatment of late employee contributions and their impact on tax deductions. It underscores the importance of adhering to statutory deadlines and provides clarity on the repercussions of non-compliance.
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