This case involves Adit Infratel Private Limited, which appealed against the order of the CIT(A)-I, New Delhi, concerning the assessment year 2018-19. The appeal addressed the addition made by the ITO Ward-1(1), New Delhi for late deposit of PF and ESI contributions.
The appellant, Adit Infratel Private Limited, filed its return of income for the assessment year 2018-19, declaring a total income of Rs. Nil. The Income-tax Officer (ITO) Ward-1(1), New Delhi, while processing the return under Section 143(1) of the Income Tax Act, 1961, disallowed an amount of Rs. 14,14,421 due to the late deposit of employees’ contributions to PF and ESI.
During the proceedings, the learned counsel for the assessee submitted that the issue of the late deposit of employees’ contributions to PF and ESI is covered in favor of the assessee by the judgment of the Hon’ble Delhi High Court in the case of ITO vs. AIMIL Ltd. (2010) 321 ITR 508 and M/s Pro Interactive Services (India) Pvt. Ltd. in ITA No. 983/2018. On the contrary, the learned Senior Departmental Representative (DR) opposed the submissions and supported the orders of the authorities below.
The ITAT Delhi Bench noted that the issue is squarely covered by the judgment of the Hon’ble Delhi High Court in the case of M/s Pro Interactive Services (India) Pvt. Ltd., which held that the legislative intent was to allow the expenditure when the payment is actually made, even if paid after the due date but before filing the income tax return. The Tribunal observed that the learned CIT(A) upheld the decision of the Centralized Processing Center (CPC) in making the disallowance.
On February 11, 2022, the ITAT Delhi Bench, comprising Judicial Member Shri Kul Bharat, pronounced the order, allowing the appeal of Adit Infratel Private Limited. The Tribunal directed the deletion of the disallowance made on account of the late deposit of PF and ESI contributions.
This case highlights the importance of judicial precedents in tax assessments and clarifies the treatment of belated payments towards PF and ESI contributions. The decision reinforces that such payments, if made before filing the income tax return, qualify for deduction, ensuring a fair application of tax laws.
This ruling sets a precedent for handling similar cases involving the late deposit of PF and ESI contributions. It underscores the necessity of considering judicial precedents and the legislative intent behind tax provisions, ensuring that taxpayers are not unduly penalized for procedural delays.
Case Summary of ITA 1658/DEL/2020: Adit Infratel Private Limited vs ITO Ward-1(1), New Delhi
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