The case of Geo Connect Ltd. vs ACIT, CPC, Bengaluru (ITA 1541/DEL/2021) centers around the issue of delayed payments of employees’ contributions to Provident Fund (PF) and Employee State Insurance (ESI) and their impact on tax deductions under the Income Tax Act, particularly Section 36(1)(va).
Geo Connect Ltd., a company based in Delhi, filed an appeal against the order of the Commissioner of Income Tax Appeals (CITA), which upheld the disallowance made by the Assessing Officer (AO) regarding delayed contributions to PF and ESI for the assessment year 2019-20.
The appellant contended that all contributions were deposited before the filing of the income tax return, citing precedents that supported the allowance of such delayed payments if made before the tax return filing date. The Revenue supported the order of the CITA, emphasizing the legal stipulations that contributions should be made within the due dates as per the respective acts.
The Income Tax Appellate Tribunal (ITAT), Delhi, noted the established jurisprudence favoring the assessee in cases where delayed contributions were deposited before the return filing date. The Tribunal referenced several judicial precedents, including a significant judgment by the Delhi High Court, which had ruled against the Revenue in similar cases. Consequently, the Tribunal allowed the appeal, reversing the CITA’s decision.
This decision underscores the importance of timely compliance while also highlighting the leniency afforded by law for contributions made before the filing of returns. It serves as a critical reference for other companies facing similar issues with delayed PF and ESI contributions.
The case of Geo Connect Ltd. vs ACIT sets a precedent in the treatment of delayed employee contributions towards PF and ESI, emphasizing the importance of adhering to statutory deadlines while recognizing compliance before tax filing as a mitigating factor.
Geo Connect Ltd. vs ACIT on Delayed PF and ESI Contributions: ITA 1541/DEL/2021
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