The legal battle in ITA No. 1180/DEL/2021 involves Ashok Kumar, an individual taxpayer from Hisar, Rohtak, Haryana, who challenges the decision made by the National Faceless Appeal Centre (NFAC) on his deductions claim for delayed employee contributions to Provident Fund (PF) and Employees’ State Insurance (ESI) for the assessment year 2018-19.
Ashok Kumar, the appellant, faced a significant disallowance amounting to Rs. 30,53,320 for delayed contributions to employee welfare funds, which he claimed should be deductible under the prevailing tax laws. The Centralised Processing Centre (CPC) initially disallowed these claims based on timeliness criteria outlined in the relevant Acts and Rules, which was further upheld by the Commissioner of Appeals citing amendments effective from April 1, 2021, suggesting a retrospective effect.
During the tribunal hearing, where the appellant was unrepresented, the tribunal delved into the legislative intent and judicial precedents governing such deductions. The tribunal referred to a co-ordinate bench decision, which had previously adjudicated on similar matters, indicating that amendments to sections 36(1)(va) and 43B, restricting deductions for employee contributions to statutory funds only if made within the due dates specified in respective statutes, should apply prospectively from AY 2021-22 onwards.
The tribunal decided in favor of the appellant, allowing the deduction for the disputed amount, thereby setting a significant precedent on the non-retrospective application of statutory amendments affecting deductions related to employee welfare contributions. This decision emphasizes the importance of clear legislative communication regarding the effective dates of law changes and their implications on taxpayers’ liabilities.
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