In the case of Punjab Bevel Gears Ltd. vs DCIT, CPC, Bangalore, under ITA No. 1540/DEL/2021, the main issue revolves around the delayed contributions towards Provident Fund (PF) and Employee’s State Insurance (ESI) by the appellant and the implications under Section 36(1)(va) of the Income Tax Act.
The appeal was against the orders for the assessment years 2018-19 and 2019-20 where the Commissioner of Income Tax Appeals (CIT(A)) had upheld the addition made by the AO due to delayed PF and ESI contributions.
The appellant contended that although there was a delay in depositing the employees’ contributions towards PF and ESI, all contributions were deposited before the filing of the income tax returns. Thus, they argued, no disallowance should apply according to the precedents set by earlier cases and High Court rulings.
The Tribunal noted that similar cases had been ruled in favor of the assessee where delays were rectified before the filing of returns. They cited the Hon’ble High Court’s decision in AIMIL Ltd., which had set a precedent for such matters. The Tribunal ruled that the contributions, although delayed, if deposited before the return filing, should not attract disallowance.
This case is significant for employers and finance professionals as it emphasizes the importance of timely compliance with employee contribution regulations to avoid potential disallowances and penalties under the Income Tax Act.
The decision in ITA 1540/DEL/2021 serves as a reminder of the legal stance on delayed deposits for PF and ESI contributions and reiterates the conditions under which exceptions can be made. This case helps clarify the application of tax laws regarding employee benefits contributions.
Punjab Bevel Gears Ltd. vs DCIT on Delayed PF and ESI Contributions: ITA 1540/DEL/2021
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