The case involves Cargo Construction Company Private Limited, Delhi, challenging the disallowances made by DCIT, Circle-4(2), New Delhi, regarding delayed payments to employee welfare funds, specifically ESI and PF, for the assessment year 2018-19.
The tribunal hearing, presided over by Sh. Saktijit Dey, Judicial Member, and Dr. B. R. R. Kumar, Accountant Member, occurred via video conferencing. The case delves into the interpretations of tax deductions for employee contributions to provident funds and state insurance under the Income Tax Act, scrutinized under recent legislative amendments.
The primary dispute centers on the disallowance of Rs.XXXX claimed under Section 36(1)(va) due to payments made after the statutory due date but before the tax filing deadline. The tribunal examined comprehensive judicial precedents and statutory amendments, particularly the impact of the Finance Act 2021, on such cases. The decision affirmed the allowability of these contributions, provided they were deposited before the tax return filing deadline, highlighting significant changes in legislative intent regarding the treatment of employee contributions to welfare funds.
The tribunal’s decision in favor of Cargo Construction Company underscores the evolving legal landscape surrounding employee welfare contributions. This judgment not only resolves the dispute for the fiscal year in question but also sets a precedent for how similar cases might be treated in light of legislative amendments aimed at clarifying the dues’ payment timelines under the Income Tax Act.
ITA 1182/DEL/2021: Cargo Construction Co. vs. DCIT – Dispute Over Delayed ESI and PF Payments
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