This article delves into the case of Ashirwad Carbonics (India) Pvt. Ltd. vs Circle-3(1), Delhi, concerning the deductibility of delayed employee contributions to Provident Fund (PF) and Employee State Insurance (ESI) for the assessment year 2019-20.
The dispute centered around the disallowance of a deduction of Rs. 6,37,273 for delayed employee contributions to PF and ESI. The appeal challenges the order dated September 23, 2021, from the National Faceless Appeal Centre (NFAC), Delhi.
The tribunal examined whether the delayed contributions, although not deposited within the time specified under respective statutes, should still be allowed as deductions if paid before the due date of filing income tax returns as stipulated by Section 139(1) of the Income Tax Act. The case references several precedents and the recent legislative changes introduced by the Finance Act 2021, impacting the treatment of such contributions.
The tribunal’s decision to allow the appeal and remove the disallowance for the assessment year 2019-20 underscores a significant relief for businesses concerning employee contributions to welfare funds. This case highlights the importance of understanding legislative nuances and judicial precedents that impact corporate tax liabilities and compliance strategies.
This decision is instrumental for corporate entities in managing their payroll deductions and contributions, ensuring compliance with tax laws while safeguarding employee interests.
Manage the increasing number of hearings effortlessly by leveraging the legal AI revolution We are India's Leading revolutionary AI-powered legal platform where you can get enough insights into top cases and judgements.
Research Platform