Case Number: ITA 1230/DEL/2021
Appellant: Asian Wire Forming & Springs, Faridabad
Respondent: ACIT Circle-1, Faridabad
Assessment Year: 2019-20
Order Type: Final Tribunal Order
Date of Order: 2022-05-17
Pronounced on: 2022-05-17
This case involves the appeal by Asian Wire Forming & Springs against the order of the Assistant Commissioner of Income Tax (ACIT), Circle-1, Faridabad, for the assessment year 2019-20. The appeal was filed on 2021-09-27, and the final tribunal order was pronounced on 2022-05-17.
The core issue in this appeal was the disallowance of employee contributions towards Provident Fund (PF) and Employees’ State Insurance (ESI) due to delays in deposit. The appellant argued that although there was a delay in depositing the contributions, they were made before the filing of the income tax return, thus should not be disallowed.
Asian Wire Forming & Springs contended that all employee contributions to PF and ESI were deposited before the due date for filing the income tax return. They cited several judicial precedents, including Azamgarh Steel & Power vs. CPC and CIT vs. AIMIL Ltd., which support the view that such contributions, if deposited before the filing of the return, should be allowed.
The ACIT argued that the disallowance was justified as the deposits were not made within the due dates specified under the respective Acts governing PF and ESI. They also referenced the amendments introduced by the Finance Act 2021, which clarified that provisions of Section 43B do not apply to employee contributions.
The tribunal considered the submissions from both sides. It was noted that the issue had been settled in favor of the assessee in several previous cases. The tribunal specifically referenced the judgment of the Hon’ble Delhi High Court in PCIT vs Pro Interactive Service (India) Pvt. Ltd., which held that employee contributions deposited before the filing of the return should not be disallowed.
The tribunal also addressed the applicability of the Finance Act 2021 amendments, concluding that these changes were prospective and applicable from assessment year 2021-22 onwards, not relevant to the current case.
Based on the presented arguments and judicial precedents, the tribunal ruled in favor of the appellant, Asian Wire Forming & Springs. The disallowance of employee contributions towards PF and ESI was deemed unjustified as the deposits were made before the filing of the return.
The final judgment was:
IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH ‘G’, NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER.
Order: The appeal filed by Asian Wire Forming & Springs is allowed. The ACIT’s disallowance of Rs. 12,52,401 under Section 36(1)(va) is reversed.
This case highlights the importance of adhering to judicial precedents and the timely deposit of statutory contributions. It also underscores the nuanced application of legislative amendments based on their effective dates.
Asian Wire Forming & Springs vs. ACIT Circle-1, Faridabad: Disallowance of Employee Contributions
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