In the case of ITA No. 1957/DEL/2022, Innovision Ltd, New Delhi, contested the Income Tax Officer’s (ITO, Ward-12(1), New Delhi) decision regarding the disallowance of late payments of Provident Fund (PF) and Employee’s State Insurance (ESI) contributions for the assessment year 2019-20. The final judgment was delivered by the Income Tax Appellate Tribunal, Delhi Bench ‘G’, presided over by Shri Chandra Mohan Garg (Judicial Member) and Shri Pradip Kumar Kedia (Accountant Member) on September 21, 2022.
The main contention in the case was whether the late payment of employees’ contributions to PF and ESI could be accepted as deductions under the Income Tax Act, 1961. The appellants, Innovision Ltd, argued that despite the late payment, all contributions were made before the filing of the income tax return, and thus should be allowed as deductions. The tribunal examined this issue in light of the amendments to Section 36(1)(va) and Section 43B introduced by the Finance Act, 2021, which specifies that such contributions are deductible only if made within the prescribed due dates.
The tribunal’s decision relied heavily on judicial precedents and the interpretation of legislative changes brought about by the Finance Act, 2021. It was concluded that for the assessment year 2019-20, the amendments do not apply retroactively, and thus the payments made by Innovision Ltd before the filing of their income tax returns should be accepted as valid deductions. This ruling highlighted the importance of adhering to statutory due dates for payment of employee contributions to avoid penalties and legal disputes. The decision was a significant interpretation of the tax implications of late payment of PF and ESI contributions.
This detailed article serves as a comprehensive resource for understanding the complexities involved in tax law, especially concerning compliance with employee benefit contributions and their impact on corporate taxation.
Judicial Review: Innovision Ltd vs. ITO on Late Payment of PF/ESI Contributions – A.Y. 2019-20
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